March 8, 2012 / 2:05 PM / in 6 years

CORRECTED-U.S. watchdog extends auditor rotation debate

* Deadline for comments extended

* Paul Volcker, former SEC chairs to speak

* Businesses, Chamber oppose auditor term limits

By Dena Aubin

March 7 (Reuters) - 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 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 companies’ books.

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 highest-fee clients.

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 PricewaterhouseCoopers LLP.

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.

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