The United States Public Company Accounting Oversight Board (PCAOB) has issued a concept release to solicit public comment on ways that auditor independence, objectivity and professional scepticism can be enhanced, including through mandatory rotation of audit firms. The proposals follow earlier proposals for audit reform in Europe (see our earlier story).
Mandatory audit firm rotation would limit the number of consecutive years for which a registered public accounting firm could serve as the auditor of a public company, with the PCAOB considering the implications of a 10 year limit. The concept release paper outlines the PCAOB's rationale for proposing mandatory rotation, and asks for constituent feedback on matters such as the appropriate maximum term, which types of entities the rotation proposal should apply to, and transitional and implementation considerations.
See full Press Release.
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