Study Finds Public Company Support For Auditor Rotation

A recent survey of public companies shows nearly half of respondents support mandatory auditor firm rotation, which contradicts the overwhelmingly negative reaction to the idea in more than 600 comment letters to the PCAOB.

“These results are somewhat surprising as it can be expensive and time-consuming to change external auditors, and such an action would represent a very substantial change in the external auditor arrangements for companies,” the Protiviti report says. “Further, the limited number of global network accounting firms significantly restricts rotation options.”

Protiviti annually surveys public companies on the Sarbanes-Oxley corporate reform legislation, and asked this year about the mandatory auditor firm rotation proposal. Among large accelerated filers, Protiviti said 47% of companies were in favor of rotation, and 60% of nonaccelerated filers agreed with the idea. The report also notes, “The PCAOB’s consideration of auditor rotation continues to evolve. At the time this survey report was released, it appears the PCAOB may be redirecting its focus to improving the effectiveness of audit committees.”

After nearly a decade of conducting the study, companies generally agree the compliance costs and efforts borne at the outset have led to improved internal control structures. However, the results suggest there are plenty of opportunities for companies to automate controls, the report indicates. Learn more at www.protiviti.com/soxsurvey.