McDonough, a former Federal Reserve official, in June 2003 became head of the Public Company Accounting Oversight Board, which was created by Congress in 2002 to help shore up investor confidence after the wave of corporate scandals.

He was chosen, and persuaded to take the job, by then-chairman of the Securities and Exchange Commission, William Donaldson.

On Friday, SEC Chairman Christopher Cox said in a statement he was grateful that McDonough had agreed to remain in place "long enough to permit a thorough search for a worthy successor."

Cox said McDonough "has provided superb leadership at a critical time to our nation's investors, capital markets and public companies, as well as the accounting firms that audit them."

McDonough, who is 71, said he had decided to leave now because he believed the mission of establishing a viable organization had been accomplished. He plans to resign on Nov. 30 or when his successor is in place, whichever is sooner, and to explore opportunities in corporate governance, finance or international affairs.

He said the oversight board is now "a vibrant institution with ... a superb, highly dedicated staff of almost 400 people."

Treasury Secretary John Snow called McDonough "a man who has been an outstanding chairman; a man who was the right person, at the right time, to do a critically important job."

McDonough, in a statement, said, "The supervisory process that we have adopted is working well, implemented by the adoption of auditing standards that make sense and an inspection process that helps auditors realize they must improve their practices to win back the support of the public."

The board also restricted the types of tax services that accounting firms can provide to the companies whose books they audit.

Congress created the board to replace the accounting industry's own regulators amid the business scandals, giving it subpoena power and the authority to discipline accountants. The corporate fiascos that began with Enron Corp. exposed inadequate internal controls and auditors at major companies who had become too cozy with the corporations whose books they examined. The board's operations are funded by fees on public companies according to their size - as much as $1.3 million a year for the biggest.

The board had a rocky start in a controversy over the selection of its first chairman, former FBI Director William Webster, by then-SEC Chairman Harvey Pitt. Pitt resigned in November 2002, after it came to light that he had not informed the other SEC commissioners that Webster had headed the audit committee of a company that later came under investigation for fraud and that he had fired the company's outside auditors. Webster resigned as chairman of the oversight board.