This comes from Blackswan87:
It seems that PCAOB wants to limit audit firm tenure for public companies. It will gather feedback and hold a public forum in March 2012. Certain questions PCAOB is trying to determine:
- whether the rule should only apply to the largest public companies,
- if a 10 years rotation is a proper measure, and
- what would be some of the advantages and disadvantages of the mandatory rotation.
PCAOB must determine
- if the benefits will outweigh the cost,
- the effect the mandatory rotation will have on investors and
- the public and some of the potential consequences.
The question remains if a mandatory rotation will solve a broken system or if more tinkering would actually make matters worse. In other words, are audit deficiencies due to lack of objectivity?
What do you guys think? Should audit firms rotate their public companies? Wouldn’t this mean that public accounting firms will lose some of their biggest client? KPMG having to give up Citi or PwC having to give up Goldman Sachs would definitely have a negative impact on their revenue, and the profession as a whole?
If you agree that rotations should happen, is 10 years mark fair?