Independent directors are heading into 2012 with concerns they may soon be forced to rotate the audit firms their fund complexes use. Such a mandate—floated by the Public Company Accounting Oversight Board in a recent concept release—would increase costs to shareholders and add to the workload of audit committees and fund management firms, while potentially diminishing the quality of the audits themselves, according to individual directors and the trade groups that represent them.
The PCAOB issued its “Concept Release on Auditor Independence and Audit Firm Rotation” on Aug. 16, soliciting public comment on ways to enhance auditor independence, objectivity and “professional skepticism.” In it, the PCAOB specifically asked for comment on mandatory audit firm rotation and queried for other approaches as well. The comment period ended Dec. 14.
The Independent Directors Council, Mutual Fund Directors Forum and Investment Company Institute all opposed mandatory audit firm rotation, as did ....