SEC's key accounting guru working to streamline rules

WASHINGTON — For thousands of investors and executives at publicly traded companies, Conrad Hewitt may be one of the most important Washington civil servants they've never heard of.

The chief accounting guru at the Securities and Exchange Commission (SEC), Hewitt stands at the center of burning policy debates — from how far to cut back on corporate reforms imposed after the Enron debacle to which executives are to be punished for manipulating their companies' numbers.

Hewitt, 70, came to the job in August in the twilight of a long career as a California banking regulator and a partner at Ernst & Young, one of the nation's four largest accounting firms.

"I thought it was a great opportunity to cap my career," he said.

Popular on boards

But the major influence on Hewitt's thinking may be his service as a board member at 10 companies, many of which spent millions of dollars complying with the 2002 Sarbanes-Oxley Act that imposed financial and governance strictures on businesses and their accountants.

One of his associates back then called the process "an exercise in futility."

Now Hewitt and SEC Chairman Christopher Cox are in the midst of an effort to streamline those regulations, digesting complaints from business and counterattacks from investor advocates who warn that too much rollback would mean more Enrons and WorldComs.

After only seven months, Hewitt and his impact are difficult to measure because the initiatives he is pursuing will take years to mature.

His most important agenda item is getting mixed reviews.

Business groups and lawmakers have mostly welcomed a plan to shear back a thicket of rules that required companies to document their financial controls in an effort to prevent fraud and mistakes.

But certain consumer advocates call the plan weak.

More than most recent holders of the job, Hewitt polished a reputation for being friendly to business.

He was manager of several Ernst & Young offices on the West Coast, including Seattle, where he helped forge relationships with such key clients as Bank of America.

Then he became a banking regulator who helped slash duplicative state rules in the late 1990s.

"He's been a regulator, but he's a businessman," said Terry Robinson, president and chief executive of North Bay Bancorp, a bank holding company in Napa, Calif., where Hewitt served on the board until his SEC appointment last year.

Influential role

What Hewitt says matters. He controls the work of more than 60 accountants, oversees pressing questions posed by businesses and their auditors and passes judgment on the accounting that underlies the SEC's cases against executives and companies.

Broad efforts to make U.S. accounting policies compatible with foreign counterparts, as well as scores of enforcement cases that involve executives tampering with stock-option dates, are also part of the agenda.

Asked whether he intends to stay at the SEC through the presidential election in 2008, Hewitt said with a smile, "I plan to be here. It'll take me that long to get everything halfway done."