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On Thursday, February 6th, 2014, the PCAOB abandoned their three-year pursuit of a rule to boost auditor independence due to fierce resistance from senior finance executives.
The Public Company Accounting Oversight Board conceded defeat when Chairman James Doty told the SEC that “We don’t have an active project or work going on within the board to move forward on a term limit for auditors.” The auditor rotation concept came from the realization that “hundreds of audit failures” occurred during PCAOB inspections and that management influence over auditors has potentially led to erosion of public confidence in audits. The PCAOB’s initiative to increase auditor oversight and independence was met largely by criticism, even by those who believed that working towards greater auditor independence was important. Detractors have stated that requiring companies to rotate auditors wouldn’t provide any additional audit quality that wasn’t already being provided by having lead audit partners rotate.
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What are your opinions towards financial auditing reform?