* Deadline for comments extended in unusual move
* Paul Volcker, former SEC chairs to speak
* Businesses, Chamber oppose auditor term limits
By Dena Aubin
March 7 In an unusual move, a U.S. audit
industry watchdog is giving the public more time to weigh in on
a proposal to limit how many years an audit firm may work for
the same company, an idea meant to bolster the independence of
auditors from their clients.
After being inundated with hundreds of letters opposing the
idea, the Public Company Accounting Oversight Board said on
Wednesday that the comment period would extend to April 22. It
had ended on Dec. 14.
The PCAOB also named the speakers for a March 21-22 public
forum on auditor term limits. Among them are several industry
notables who have who supported the idea in the past.
The PCAOB touched off a furor in August when it said it
would consider requiring term limits, or audit firm rotation, as
one way of ensuring that auditors check companies' books with a
more skeptical eye.
PCAOB Chairman James Doty said at the time that some
auditors were doing a less-than-adequate job of checking
Requiring companies to switch auditors on a regular basis
would break up some business relationships that have lasted more
than a century and force auditors to give up some of their
The idea faces an uphill battle, with the powerful U.S.
Chamber of Commerce, hundreds of U.S. companies and the biggest
accounting firms lined up against it.
The PCAOB has received more than 600 letters, most in
opposition to the idea, versus the 20 to 40 letters typically
received on PCAOB deliberations.
PCAOB spokeswoman Colleen Brennan said the comment period
was extended to allow people to weigh in after hearing what was
said at the forum.
Several speakers slated for the forum were members of a
Conference Board commission that recommended in 2003 that board
audit committees consider rotating firms after 10 years.
Among them are former Federal Reserve Chairman Paul Volcker,
former U.S. Securities and Exchange Commission Chairman Arthur
Levitt, former Comptroller General Charles Bowsher and former
mutual fund heads John Bogle of the Vanguard Group and John
Biggs of TIAA-CREF.
Also slated to speak are former SEC chairs Richard Breeden
and Harvey Pitt as well as the U.S. heads of the five largest
accounting firms - Deloitte LLP, Ernst & Young LLP
, Grant Thornton LLP, KPMG LLP and
Doty said in August that the PCAOB had found hundreds of
audit failures during its inspections of accounting firms and
that lack of a properly skeptical attitude by auditors could
have contributed to the problems.
About 175 companies in the S&P 500 have had the same auditor
for 25 years or more, according to data firm Audit Analytics.
Rotation was considered after the Enron and WorldCom
accounting scandals in 2002, but regulators settled for
requiring lead auditors, not the firms themselves, to rotate
after five years.