THE PUBLIC Company Accounting Oversight Board (PCAOB) has clashed with US lawmakers over plans to introduce mandatory auditor rotation.
During a recent US Congressional hearing of the House Financial Services Committee, the PCAOB was urged to tone down its talk of mandatory rotation as it had not produced evidence to suggest the benefit would outweigh the cost.
The PCAOB was also accused by Republican representative Scott Garrett of “crossing the threshold of audit regulation in an attempt to regulate corporate governance.”
“The PCAOB that it is not a policy-making entity; Congress and this committee are the policy makers,” said Garrett, who chairs the House Capital Markets and Government Sponsored Enterprises Subcommittee. “The PCAOB’s job is to regulate and oversee the auditing profession. I am very concerned about some of the recent activist proposals put forth by the PCAOB.”
However, PCAOB chairman James Doty (pictured) denied that the board had proposed mandatory rotation.
“The PCAOB is engaged in a deep and wide-ranging public dialogue about ways to enhance the independence, objectivity and professional scepticism of public company auditors,” Doty told the hearing in a prepared statement.
Doty also assured the hearing that the board was a “long way from any kind of decision on whether firm rotation should be proposed as a standard.”
Discussion around auditor is likely to stretch until at least 2013.