The accountancy profession in Argentina has teamed up in an attempt to convince the government to change audit rules introduced last year by the national regulator, CNV (Comision Nacional de Valores), which introduces audit firm rotation every three years and mandatory partner rotation every two years for the country’s public companies.
SMS Latinoamerica president Pablo San Martin said the decision by the regulator past September surprised everyone from firms, professional bodies, issuers as well as public companies.
San Martin believes the changes, likely to come into effect in2016, pose a serious danger to audit quality.
"Both professional organisations, the Institute of Buenos Aires (Consejo Profesional de Ciencias Economicas de la Ciudad Autonoma de Buenos Aires) and the National Federation (Federacion Argentina de Consejos Profesionales) received no answer from the regulator to several requests for a dialogue on the incoming changes.
"In the profession, all together, we are worried that public interest and audit quality could be seriously threatened by such a short mandatory rotation of firms and lead engagement partner rotating ."
San Martine said that the regulator decided to introduce the new rules without any prior consultation with the profession or other stakeholders and the decision by the CNV came in the middle of an external quality review looking at audit quality.
Glimmer of hope
Despite the profession stepping together – from small to the biggest firms in the country – in an attempt to start dialogue with the regulator, public companies seem to have had more success. San Martin says that there have been indications that the CNV is speaking with public company representatives, who are lobbying against the changes.
He also added that the hope is that the regulator might reconsider and look at what the EU has done or closer to home Brazil.
"In Brazil for example the rotation is required every five years extended to 10 if the quality of audit committee is in line with the regulator’s requirements," he adds.
With the new rotation rules Argentina joins a growing number of countries including all EU member states implementing mandatory rotation for its public companies.