• PCAOB Member Jay Hanson Repeats His Belief That Auditor Rotation Is Not Gonna Happen

    By | March 5, 2013

    The Brits can do whatever they want; Mr. Hanson has a story and he's sticking to it:   

    Having reviewed the comment letters and feedback from the round table panelists and others, it is clear to me that there is little support for mandatory audit firm rotation. As I noted in my statement when we issued the concept release, our inspection findings over the years have yielded a substantial amount of data. To date, I have not seen an analysis of this data that establishes a causal link between an audit failure and the audit firm tenure. I do not see how the Board could move forward on mandatory rotation without that causal link. I also believe mandatory rotation would be extraordinarily difficult to justify through an economic analysis of its costs and benefits.

    [PCAOB]

    • Tax_Lackey

      I was discussing a rotation requirement today with a partner. We discussed how this could drive up the value of certain audit engagement teams and team members. For example, a senior manager on an audit would be very attractive as a partner candidate to the auditor-elect. Could auditor rotations lead to entire teams jumping ship in order to make the transition easier and the engagement more profitable?

    • BKGreed

      I’d rather just see the government take over financial statement audits. Think of how efficient they would be then? I envision companies creating an office for their auditors to stay there year-round.

    • Big Daddy

      Hanson seems to qualify as the only person at the PCAOB that would qualify as a scholar – finally someone who can look beyond the sound bites that the media love so much, and say something succinct but at the same time is an elegant argument – all this work over 10 years, and with no analysis, the best the PCAOB can say is, rotate auditors to increase quality?