House Approves Bill Banning Mandatory Audit Firm Rotation

The House of Representatives voted 321-62 in favor bill, H.R. 1564, though it may still face a tough road in the Senate. The legislation was co-sponsored by Rep. Robert Hurt (R., Va.) and Rep. Gregory Meeks (D., N.Y.) and passed with support from 211 Republicans and 110 Democrats. The 62 representatives who voted against the bill were all Democrats.

The bill aims amend the Sarbanes-Oxley Act of 2002 to prevent the Public Company Accounting Oversight Board from requiring companies to use specific auditors or from requiring companies to use different auditors on a rotating basis. Its sponsors said they also hoped the bill would send a strong message to regulators in Europe who are considering auditor term limits, that mandatory rotation would be unlikely in the U.S.

The following is a statement by Barry Melancon, president and CEO of the American Institute of CPAs in reaction to the House of Representatives’ passage of H.R. 1564, the Audit Integrity and Job Protection Act, on a vote of 321 – 62: “In the absence of evidence that mandatory audit firm rotation would enhance audit quality, the House has sent regulators in the United States and Europe a clear message that the time has come to end the debate over rotation. In Europe, there is a misimpression that the continued consideration of the PCAOB’s concept release means that the U.S. is headed toward adoption of a mandatory firm rotation requirement. Today’s House vote will go a long way toward alleviating confusion and uncertainty for policy makers and stakeholders on both sides of the Atlantic. I want to thank the measure’s co-sponsors, Representatives Robert Hurt of Virginia and Gregory Meeks of New York, as well as its many congressional supporters.”