The US Committee of Financial Services (COFS) has unanimously passed H.R. 1564: The Audit Integrity and Job Protection Act which, if enacted, will prevent any possible US Public Company Accounting Oversight Board (PCAOB) attempt to implement mandatory audit rotation.
The bill was introduced by Robert Hurt in response to the PCAOB’s August 2011 concept release on auditor independence and audit firm rotation.
Despite widespread opposition to the concept, the PCAOB were still to make a decision whether to proceed with the concept or not.
The decision could be taken out of the PCAOB’s hand, though, as the bill seeks to amend the Sarbanes-Oxley Act of 2002 to prohibit the PCAOB from requiring public companies to use specific auditors or require the use of difference auditors on a rotating bases.
On a blog about the bill, COFS said that the selection of a company’s auditor belonged to its board of directors and ratified by shareholders as opposed to a governmental regulator. And, that that rotation would cause confusion for a company, as opposed to increasing transparency, and that there was only a limited amount of firms capable of conducting audits for the largest multi-national corporations.
Hurt said that the act would, "prevent the threat of federal over regulation so that our businesses can continue to focus on creating the jobs that our local communities need rather than cutting through more government red tape."
Although all 52 members of COFS voted in favour of the bill, it still needs to go through Congress before it is enacted.