A coalition of businesses and industry organizations are calling for the PCAOB to drop discussions to require mandatory audit rotation.
The group, which includes the U.S. Chamber of Commerce and the AICPA, said in a joint comment letter that the PCAOB has not demonstrated the need for such rotation. Other companies signing the letter include Viacom, Safeway, United Healthcare and FedEx.
The letter also detailed the long history of rejection for auditor rotation. Mandatory auditor rotation was rejected by an independent commission in 1978, by the SEC in 1994, and again in 2003 by the General Accounting Office after the Sarbanes-Oxley Act was passed.
PCAOB proposed mandatory auditor rotation last fall. More than 600 comment letters
were submitted before the original comment period closed Dec. 14, including a letter
from OSCPA’s A&A Committee submitted on behalf of the membership. The reopened comment period ended Monday.
Many groups have objected
to the concept release. A number of concerns center on whether any real benefits would come from more frequent audit rotations. There are also concerns that increased rotation would unnecessarily drive up audit costs.
As we’ve reported
previously, Rep. Mike Fitzpatrick, R-Penn., introduced in March a six-line amendment to the Sarbanes-Oxley Act of 2002 to prohibit the PCAOB from requiring public companies to use specific auditors or require the use of different auditors on a rotating basis.
During the committee hearing, Rep. Scott Garrett, R-N.J., joined the U.S. Chamber of Commerce in accusing the PCAOB of “mission creep.”
“The PCAOB is not a policy-making entity,” Garrett said.
PCAOB Chair James Doty told Congress at the time that the board was only at the “concept release” stage, and had not yet made a formal proposal on the idea.