Legislation that would amend the Sarbanes-Oxley Act of 2002 to prohibit the Public Company Accounting Oversight Board (PCAOB) from requiring public companies to use specific auditors or require the use of different auditors on a rotating basis was introduced by U.S. Representative Robert Hurt (R-VA) on April 17.
In a statement released by his office, Hurt said the Audit Integrity and Job Protection Act (H.R. 1564) will “allow public companies to maintain quality auditing practices and avoid unnecessary additional costs that ultimately are passed on to investors and consumers.” U.S. Representative Gregory Meeks (D-NY) is the lead cosponsor of the bill.
The PCAOB has been considering ways to enhance auditor independence – including through mandatory rotation, or term limits, for audit firms – since 2011. The American Institute of CPAs supports the goal of enhanced auditor independence, but questions the PCAOB’s continued consideration of mandatory firm rotation in the absence of evidence that links audit firm tenure with the Board’s inspection findings.