* Rule proposal will not be ready this year
* Ex-Fed Chair Volcker says audit rotation makes sense
* Former SEC Chair Levitt supports rotation
* Ex-SEC Chair Pitt says proposal goes too far
(Recasts, adds comments from former securities and banking
By Sarah N. Lynch and Dena Aubin
WASHINGTON, March 21 The U.S. watchdog for the
auditing industry said on Wednesday that a debate over possibly
forcing corporations to change auditors every few years would
stretch at least into 2013.
No potential rule proposal on term limits for auditors will
be ready this year, the Public Company Accounting Oversight
Board (PCAOB) said, as critics and supporters including some
ex-regulators descended on Washington this week to weigh in on
"We will be in 2013 before we can reasonably expect to get
to any kind of a rule proposal," PCAOB chairman James Doty told
Reuters on the sidelines of a two-day roundtable on auditor
Doty said Wednesday's roundtable is just the first of many
public meetings he hopes to hold as the PCAOB weighs term
limits, intended to boost auditors' independence from clients
and keep auditors from becoming too complacent over time.
The PCAOB first floated the idea last August after
uncovering numerous audit deficiencies over the years. See
Opposition has followed from audit firms and companies, many
of which attended Wednesday's forum to press their case.
A mandatory rotation rule would disrupt many long-standing
and lucrative business relationships between auditors and
corporations, while also forcing audit firms to spend more money
competing among themselves for business.
About 35 percent of companies in the S&P 500 index have had
the same auditor for 25 years or more. Several have had the same
auditor more than a century, according to Audit Analytics data.
In a move that could influence the PCAOB's decision, some
former regulators at the forum supported rotation. Among them
were Federal Reserve ex-Chairman Paul Volcker and former U.S.
Securities and Exchange Commission Chairman Arthur Levitt.
"It does seem to me that regular audits should not become a
sort of long-term annuity for the accounting firm paid for by
the company being audited, rather than being responsive ... to
the investing public," Volcker said.
THREE FORMER SEC CHAIRMEN WEIGH IN
Levitt, SEC chairman from 1993-2001, said mandatory auditor
term limits make sense, particularly where an audit firm has
worked for a company for a long time, has former partners
working for clients, or performs a lot of non-audit services.
"Investors deserve the perspectives of different
professionals every so often," he said in prepared remarks.
Not all former regulators were as supportive.
Harvey Pitt, another former SEC Chairman, warned that
rotation would not benefit shareholders.
He instead urged new rules that would require audit
committees of corporations' boards of directors to consider
whether or not to switch auditors, and disclose their reasoning.
Since the PCAOB first started talking about auditor rotation
last year, companies and auditors have worked hard against it.
"We do not support the proposal for mandatory audit firm
rotation, nor are we convinced that these will achieve the
PCAOB's desired improvements in these areas," said Darren Wells,
the chief financial officer for Goodyear Tire and Rubber Co.
Another former SEC Chairman, Richard Breeden, also expressed
skepticism that rotation would help objectivity.
"You would have some degree of musical chairs among audit
firms and I really doubt that objectivity levels would rise that
much as a result," he said.
(Reporting by Sarah N. Lynch and Dena Aubin; Editing by Kevin
Drawbaugh, Bernard Orr)