Big4.com Exclusive: European Commission Proposal will Hurt Audit Quality, says PwC
In an effort to reduce any possible collusion or conflicts of interest among executives and their auditors, the European commission is looking to implement “firm rotation” guidelines where companies will have to rotate away from a firm and have a cooling off period.
I know my company is worried about this policy entering the US with our audits because we are not a Big4 firm and each client is very important to our overall success. I am conflicted if we should implement a similar system here. Ideally it is beneficial for external users of the financial statements to have another set of eyes on the financial statements. It seems like a way to help pick up fraud or misstatements that one firm may have missed for several years.
On the other hand, if a firm is happy with their auditors, should we really force them to fire them after a set period of time?