In June the profession lost one of its most important figures, Don Nicolaisen. For many of us who knew, respected, and admired Don, it was a sad event—but also an opportunity to celebrate the life of a man who positively affected the careers of so many professionals, played a central role in helping restore public confidence in reported financial information following the reporting scandals of 2001–2002, and helped shape key aspects of our current reporting system.

Donald Thor Nicolaisen was born in 1944 in Milwaukee, Wisconsin. The son of an accountant, he obtained a bachelor’s degree in business administration from the University of Wisconsin, Whitewater, majoring in economics and psychology. With an eye toward available job opportunities, he also took some accounting courses, and in 1967 he joined the Milwaukee office of Price Waterhouse. That marked the beginning of an over 35-year career at the firm and successor PricewaterhouseCoopers that would take him to the highest ranks of the partnership, including serving as the lead audit partner and global relationship partner on several of the firm’s largest clients, heading Price Waterhouse’s national office, leading the financial services practice, and serving on the firm’s U.S. and global boards. For many years, he was also a member of FASB’s Emerging Issues Task Force and of several senior professional committees.

In 2003, SEC Chairman Bill Donaldson asked Don to join the SEC as chief accountant, a role that put him center stage at a very critical time in the history of our financial reporting system.

Leadership at the SEC

In 2003, SEC Chairman Bill Donaldson asked Don to join the SEC as chief accountant, a role that put him center stage at a very critical time in the history of our financial reporting system. Enron, WorldCom, and other reporting scandals had shaken public confidence in the reporting system, and the reforms promulgated by the Sarbanes-Oxley Act of 2002 (SOX) were only beginning to be implemented. Don quickly strengthened the Office of the Chief Accountant, creating two new deputy director positions and adding staff to more effectively oversee the work of the fledgling PCAOB and to better engage with international accounting and auditing standards setters and foreign regulators. As chief accountant from 2003 to 2005, Don was closely involved in the following areas:

  • The implementation of key provisions of SOX, including section 404 on internal control reporting
  • Supporting the work of FASB and the IASB on the global convergence of accounting standards
  • Setting forth a “road map” for elimination of the SEC’s reconciliation requirements for foreign registrants reporting under IFRS
  • Working with FASB to improve the accounting for executive and employee stock compensation in the face of significant opposition and attempts at political intervention from segments of the corporate sector
  • Initiating the SEC’s voluntary XBRL filing program
  • Coaxing needed reforms from public accounting firms.

Above all, Don was a clear and consistent voice for better, clearer, and more trustworthy reporting to the investing public.

Viewing Don’s actions and influence as chief accountant in a historical context, I feel he played an important and positive role in helping shape today’s reporting environment and in leading the profession. In comparison with the period following the major reporting scandals, there is today much greater public confidence in reported financial information, with far fewer restatements of public company financial statements. Many attribute this to the implementation of SOX section 404 and other provisions that, as noted above, began in earnest under Don’s leadership. His strong support of global accounting standards and the convergence road map provided added impetus to FASB and IASB’s efforts, which have resulted in converged standards in a number of major areas, including accounting for stock compensation, business combinations, segment reporting, fair value measurement, and more recently revenue recognition, thus enabling greater comparability of reported information around the globe. In addition, XBRL filings are now required of U.S. companies and in many other jurisdictions. But again, and perhaps most importantly, Don set a tone and emphasis on the critical importance of high-quality financial reporting that continues today.

Don, together with Arthur Levitt, co-chaired the U.S. Treasury Department Advisory Committee on the Auditing Profession, whose 2008 report contained important recommendations for improving the audits of public companies.

Other Accomplishments

After leaving the SEC, Don served as a member of the boards of MGIC Investment Corp., Morgan Stanley, Verizon Communications, and Zurich Financial Services, chairing audit, risk, and other board committees. He was also an advisor on accounting, auditing, and business matters to many other major companies. Of significant impact on today’s reporting environment and the profession, Don, together with former SEC Chairman Arthur Levitt, co-chaired the U.S. Treasury Department Advisory Committee on the Auditing Profession (ACAP), whose 2008 report contained important recommendations for improving the audits of public companies, a number of which were subsequently implemented by the profession and the PCAOB. For example, the PCAOB and other auditing standards setters now require expanded auditor reporting of “critical/key audit matters” and other information. In response to ACAP’s recommendation that the AICPA and the American Accounting Association form a commission to study the future structure of higher education for the profession, these two groups established the Pathways Commission, whose groundbreaking 2012 report recommended many major reforms in accounting education aimed at building a “learned profession” that purposefully integrates accounting research, education, and practice for students, practitioners, and educators.

In 2009, Don was inducted into the Financial Executives International Hall of Fame.

A Legacy of Service, Impact, Family, and Friends

It is evident from the above that Don had a significant impact on the many organizations with which he was involved, on the profession, and on the reporting system and the capital markets. But for those of us who had the good fortune to work with and know Don, this only begins to tell the story of a great professional and a wonderful person who positively affected the careers of hundreds of professionals across many organizations. In his dealings with colleagues, it was never about Don. For him, it was about helping others succeed and, in the process, bettering the organization. Though he spoke softly, his views and advice carried great weight, respect, and admiration for their insight and clarity as to the right thing to do. And he actively brought people together. For a number of PricewaterhouseCoopers partners past and present, Don is also remembered as the father of “Bogey Train,” an annual multi-day golf and social event that Don started in 1993 and that is still going strong nearly 27 years later.

While Don is gone, his impact and influence lives on with the hundreds of people for whom he was a mentor, role model, and good friend. That, together with his loving family, is in my view his greatest legacy.

Bob Herz is the former chairman of FASB. He and Don Nicolaisen were fellow PricewaterhouseCoopers partners, worked closely together when Don was SEC chief accountant and Bob was FASB chairman, served together on the board of Morgan Stanley from 2012 to 2017, and were good friends.