Global audit and consulting firm Ernst & Young ERNY.UL has named Mark Weinberger, a longtime Washington insider, as its next chairman and chief executive, a signal that connections in the U.S. capital may be growing in importance to a profession facing greater scrutiny.
A former lobbyist and assistant secretary of the U.S. Treasury under President George W. Bush, Weinberger will succeed Jim Turley, who announced previously that he would retire on June 30, 2013, Ernst & Young said in a statement on Tuesday.
Weinberger's public policy experience is unusual for the head of a global audit firm, said Arvind Hickman, editor of the International Accounting Bulleting.
"I can't think of too many global chiefs who have had a distinguished career in government. Normally they go the other way, from the profession into high positions in the public and private sectors," he said.
Weinberger will be taking over at a crucial time for the audit profession, which is under scrutiny from regulators in the United States and Europe for auditors' performance during the 2007-2009 financial crisis, when they failed to warn of problems at major banks that collapsed.
The main U.S. auditor watchdog, the Public Company Accounting Oversight Board, is considering whether to require audit firm rotation, a measure vehemently opposed by the audit industry, along with several other reforms. Rotation would force major companies to change auditors periodically. Many have the same accounting firms working for them for decades.
The European Union also is mulling proposals that could force the largest audit firms to split off their consulting businesses, as well as auditor rotation.
Ernst & Young is facing a lawsuit by the New York Attorney General over its audits of failed bank Lehman Brothers and an official review of its audits of Japan's Olympus Corp (7733.T). An unofficial panel cleared Ernst & Young of responsibility for an accounting fraud at Olympus on Tuesday.
"One of his first tasks will be guiding the network through this period of turmoil and any potential punitive and reputational damage," Hickman said.
Weinberger, 50, co-founded Washington Counsel, a leading tax lobbying firm that was bought by Ernst & Young in 2000 and now operates as Washington Council Ernst & Young. He runs Ernst & Young's global tax practice and serves on the firm's global markets executive and public policy committees.
"Mark has a regulatory mindset, which will ensure Ernst & Young maintains strong connections with the many audit regulators and other officials with whom we engage globally," Turley said in a statement.
During President Bill Clinton's administration, Weinberger was named to the Social Security Advisory Board and has worked in the U.S. Senate on tax policy and pension advisory committees.
Ernst & Young, operating in 144 countries, is one of the Big Four global audit and consulting firms, which also include PwC PWC.UL, Deloitte & Touche DLTE.UL and KPMG KPMG.UL.