Some big U.S. companies have used the same auditing firms for decades, while others like Procter & Gamble and General Electric have each kept the same firm for more than a century.
Those long-time, cozy relationships have some critics urging the U.S. Public Company Accounting Oversight Board to encourage tougher, more independent audits by requiring a periodic rotation in auditing firms hired by companies, Reuters reports.
"When you look at some of the big audit failures over the years, whether it's Enron or Waste Management, you find instances where they've had the same auditor for in some cases decades," said Barbara Roper, head of investor protection for the Consumer Federation of America.
But the Big Four accounting firms -- Deloitte, Pricewaterhouse Coopers, KPMG and Ernst & Young -- are likely to fight any mandatory rotation, which could rob them of lucrative and loyal clients. The firms also contend that good auditing work comes from a detailed understanding of a client company’s operations, which takes time to acquire.
Currently, the partner on an auditing job must be switched every five years, but there is no term limit on the audit firms themselves.
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