Reuters: Regulatory News: US Chamber challenges auditor watchdog on rotation

Reuters: Regulatory News Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com

US Chamber challenges auditor watchdog on rotation Mar 27th 2012, 19:32 Tue Mar 27, 2012 3:32pm EDT * PCAOB's rotation idea would make companies switch auditors * Draft Republican bill in U.S. House would rein in PCAOB By Dena Aubin March 27 (Reuters) - The U.S. Chamber of Commerce, the nation's largest lobbying group for corporations, is pressing Congress to block term limits for corporate auditors, ratcheting up pressure on regulators who are weighing such requirements. In an effort to strengthen the independence of auditors that scrutinize corporations' financial books, the Public Company Accounting Oversight Board (PCAOB) is considering making companies change, or rotate, auditors every few years. The idea is opposed by the Big Four firms that dominate auditing worldwide: PricewaterhouseCoopers, Deloitte , KPMG [KPMG.UL} and Ernst & Young, along with many of their large corporate clients. Rotation would disrupt long-standing and lucrative business relationships that the Big Four firms have with clients and force the firms to compete more vigorously among themselves. The firms say rotation would also increase costs when auditors start with new clients and have to get up to speed. In a direct attack on the idea, the chamber said in testimony prepared for a congressional hearing on Wednesday that auditor rotation is a corporate governance issue and beyond the mandate of the PCAOB. "Congress should stop this effort in its tracks and refocus the PCAOB on its core mission," the chamber said. Created by Congress after the book-cooking scandals at Enron Corp and other companies a decade ago, the PCAOB put its rotation idea out for public debate last August as one way of preventing auditors from losing objectivity. Many big companies have had the same auditor for decades and some have not changed auditors in over a century. "One cannot talk about audit quality without discussing independence, skepticism and objectivity," PCAOB Chairman James Doty, a former corporate lawyer, said at the time. Rotation should be considered as a possible counterweight to the fundamental conflict of interest resulting from auditors being paid by the companies that they audit, he said. The chamber's testimony comes days after a sharp exchange between Doty and a chamber official over rotation. At a public forum on rotation on Thursday, Doty took the chamber to task for accusing the PCAOB of exceeding its mandate as it weighed rotation and other auditor reforms. For details click on. DRAFT BILL TARGETS ROTATION Both Doty and Tom Quaadman, a chamber official, are set to testify at Wednesday's hearing on auditing and accounting oversight, scheduled by a House of Representatives panel. One panel member, Pennsylvania Republican Michael Fitzpatrick, has already drafted a bill that would strip the PCAOB of the authority to require rotation. Also voicing opposition to rotation is the American Institute of Certified Public Accountants, which represents the accounting industry. In written testimony, the institute said 2002's post-Enron Sarbanes-Oxley laws, which created the PCAOB, give board audit committees the authority to hire and fire auditors, and the PCAOB has not proven that that system is not working. The subcommittee hearing comes as accounting regulators consider an array of far-reaching changes, including a switch to international standards. The U.S. Securities and Exchange Commission is expected to decide this year whether to make such a move. Officials of the SEC and Financial Accounting Standards Board, which sets accounting standards, are also slated to testify at Wednesday's hearing. Link this Share this Digg this Email Reprints

You are receiving this email because you subscribed to this feed at blogtrottr.com. If you no longer wish to receive these emails, you can unsubscribe from this feed, or manage all your subscriptions