Mauriello Carries the Flag For Besieged Peat Marwick

Joseph Mauriello, national director of KPMG Peat Marwick's thrift audit practice, is not about to let an investigation by regulators tear down the firm's century-old reputation as the premier auditor of financial institutions.

Last month, the Office of Thrift Supervision stunned the accounting profession by subpoenaing all of Peat Marwick's thrift audit records for 1989 and 1990.

A Damaging Finding

The agency launched the examination of the firm's independence and record-keeping practices after determining that Peter Meeks, a partner in the firm, had improperly obtained loans from a thrift he was auditing, the $3.4 billion-asset San Francisco Federal Savings.

Mr. Mauriello, 46, said that the investigation is a private matter; he would not discuss it except to say that talks with the OTS will continue "until all sides are in agreement." He added, "There's no hint of any concern over the professional judgment of the firm, and no question as to any impropriety."

But headlines about the probe have put Mr. Mauriello, a 25-year veteran of the firm and its top thrift accountant since 1986, on the defensive. He musters a chuckle when he says that he is "doing a lot of traveling to undo some of the mess the press has caused us." But he doesn't disguise his annoyance at the unwanted attention: "It gets my Italian up a little."

The nationwide thrift practice audits about 800 of the 2,300 privately run S&Ls. Peat Marwick also audits about a third of the nation's commercial banks.

The OTS' sweeping subpoena would have come as a shock, no matter which accounting firm was targeted. But it was "ironic that a company with a pretty clean sheet was the one to get the wake-up call," said Brian Smith, executive vice president of the U.S. League of Savings Institutions. "Joe's a very good guy, and Peat Marwick actually has a very, very fine record."

At the Top of His Profession

Indeed, Mr. Mauriello's reputation has earned him one of the top honors in his field: In October 1989, he began a three-year term as savings and loan committee chairman of the American Institute of Certified Public Accountants. The group is the leading forum for industry practitioners and regulators; a key role is acting as a resource for the agencies that set accounting and auditing standards.

His term as chairman has coincided with a period of unprecedented upheaval in the thrift industry. Amid the thrift industry's woes, accountants and other professionals have come under scrutiny.

The S&L debacle "created this huge ground swell that |someone should have known,'" Mr. Mauriello said. "We're in the midst of a major shift in expectations and a redefinition of our role."

He does not quarrel with Congress' push to require accountants to play a bigger role in detecting problems in financial institutions. But he worries that rapid change could backfire.

"It's being done in a real speedboat fashion. You don't turn the Q.E. II around that way," he said.

"Some firms may choose, based on the risks and rewards, to get out of the [thrift] practice altogether," Mr. Mauriello said, though he suspects most will weather the changes.

A Scary Document

One of his main accomplishments as S&L chairman for the AICPA was to oversee the first rewrite since 1979 of the industry's thrift audit guide. "It's designed to scare the hell out of senior accountants to really understand the risks of the business," he said.

The Brooklyn, N.Y., native joined Peat Marwick in 1966, fresh out of St. John's University, where he also earned an MBA. He moved to Los Angeles in 1982 to take over the firm's Western region financial institutions practice. Four years later he returned to New York to run the national thrift practice. He and his wife, Mary, live in New Jersey and have two grown children.

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