* Democrats and Republicans unite against mandatory rotation
* Panel also passes bill targeting SEC, DOL fiduciary rule
By Sarah N. Lynch
WASHINGTON, June 19 In a rare show of
bipartisanship, the U.S. House Financial Services Committee
unanimously approved a bill on Wednesday that would prohibit
mandatory rotation of auditors among companies to avoid fraud
and financial misconduct.
The bill comes after the Public Company Accounting Oversight
Board, an auditor watchdog, debated whether a new policy
requiring audit firms to rotate clients every few years would
help promote auditor independence.
The PCAOB was created by the Sarbanes-Oxley Act as a
response to accounting scandals, such as Enron and Worldcom. The
Enron case led to the demise of Enron's auditor, the accounting
firm Arthur Andersen.
Those who favor requiring audit firm rotation, such as
former Federal Reserve Chairman Paul Volcker, say it would help
keep firms from becoming too cozy with corporate management.
But the idea has prompted strong opposition from the
industry, including PricewaterhouseCoopers, KPMG
, Deloitte & Touche LLC and Ernst & Young LLP
"It is boards of directors, management and shareholders who
should ultimately make the decision about which accounting firms
should audit a company's financial statements -- not the PCAOB,"
said Jeb Hensarling, Republican chairman of the House committee.
The committee also approved a bill that would place
additional requirements on the U.S. Securities and Exchange
Commission and the Department of Labor before they can adopt
rules to establish a new ethical standard for brokers who give
SEC officials have been considering imposing a uniform
fiduciary standard for brokers and investment advisers. A second
rulemaking at the U.S. Department of Labor would impose
fiduciary responsibilities only on advisers to retirement plans.
Critics have raised concerns about potential discrepancies
between the two approaches by the two agencies.
The bill would delay rulemaking efforts at both agencies by
requiring the SEC to take more steps before adopting a rule and
requiring the Labor Department to wait for the SEC to complete
its rulemaking first.