The past as prelude.

• Position: Brief Article

AS WITH LIFE ITSELF, the past as prelude is a recurring theme in tracing the progression of corporate governance. As this edition of DIRECTORS & BOARDS goes to press, Arthur Levitt has just stepped down as SEC chairman after eight years at the helm of the regulatory agency (remarkably, he's the longest-serving chairman in the SEC's 70-year history). He has left behind a profound record of accomplishment in altering how markets act and how boards behave.

In particular, his mission to improve audit committee performance and accountability was something marvelous to behold. As I sat in the audience for one of his final speaking engagements, a conference on corporate governance hosted by the Federal Reserve Bank of New York in December, I heard his fitting coda to this crusade: "During my almost eight years at the Commission, I've come to believe that one of the most reliable guardians of the public interest is a competent, committed, independent and tough-minded audit committee...By asking audit committees to consider the quality -- not just the acceptability -- of a company's financial statement, we recognize the systemic importance of justifying decisions that directly affect a company's financial reporting process."

I would submit that Levitt was a believer in audit committees way before being sworn in as SEC chairman. In the very first issue of DIRECTORS & BOARDS that I was associated with (Summer 1981), we published an article by Levitt, who at that time was chairman and CEO of the American Stock Exchange, in which he made this observation: "We believed it would...