July 30 (Bloomberg) -- U.S. Securities and Exchange Commission Chairman Mary Schapiro has two finalists to be chief accountant: acting director James Kroeker and Baltimore money manager Jack Ciesielski, people familiar with the matter said.

Kroeker, former Deloitte & Touche LLP partner and acting chief since January, and Ciesielski, who has defended mark-to- market accounting, met with commissioners this month to discuss their interest in the job, said the people, who declined to be identified before a public announcement.

The chief accountant interprets rules that require companies to disclose their financial health to shareholders. If named, Kroeker or Ciesielski would referee disputes between banks and investors over writedowns for assets that have declined in value during the recession. The accountant also will play a role in efforts to make companies including Citigroup Inc. bring billions of dollars of loans onto their books.

“It’s the most important accounting job in the world,” said Dennis Beresford, an accounting professor at the University of Georgia and former chairman of the Financial Accounting Standards Board. “It’s the person who has the power to establish accounting and auditing rules for all publicly held companies” in the U.S., he said.

Kroeker joined the SEC as deputy chief accountant in 2007. Ciesielski is publisher of the Analyst’s Accounting Observer and owner of R.G. Associates Inc., a money manager that oversees $4.18 million of assets, according to state records.

Deputy Chief

Kroeker led an SEC study released in December that opposed suspending mark-to-market accounting, which requires companies to set values on securities each quarter based on the price those assets would fetch in a sale.

Banks and their lobbyists said the rule, when applied as market values plunged and credit seized up, forced companies to mark to fire-sale prices assets they didn’t intend to sell.

The fight came to a head at a March 12 hearing when lawmakers warned Kroeker and FASB Chairman Robert Herz that Congress would amend the rules to make them more favorable to banks if regulators failed to act.

Norwalk, Connecticut-based FASB, which writes U.S. accounting standards and is overseen by the SEC, approved rules two weeks later that let companies use “significant” judgment in gauging the value of investments such as mortgage securities.

Ciesielski, previously an auditor at Coopers & Lybrand, a predecessor of PricewaterhouseCoopers LLP, has been critical of efforts by banks in the past year to push for changes to the rule. In a March blog entry, he called mark-to-market opponents “an angry mob.”

Outside Hire

SEC spokesman Kevin Callahan and Ciesielski declined to comment yesterday. Kroeker didn’t return a call seeking a comment.

Kroeker’s selection would make him the only division or office director promoted by Schapiro from within the agency.

Schapiro, who became chairman in January, hired from outside the agency to find heads for the enforcement division and the unit that reviews corporate filings after lawmakers criticized the agency’s oversight of failed Wall Street securities firms and for missing Bernard Madoff’s $65 billion Ponzi scheme.

Schapiro’s accountant would succeed Conrad Hewitt, who retired Jan. 5 after 2 1/2 years in the job.

To contact the reporters on this story: Jesse Westbrook in Washington at jwestbrook1@bloomberg.net; Ian Katz in Washington at ikatz2@bloomberg.net

Last Updated: July 30, 2009 00:01 EDT