On Monday evening, the U.S. House of Representatives passed a bipartisan bill that would ban the the potential of mandatory audit firm rotations that have been suggested by the head of the Public Company Accounting Oversight Board (PCAOB).
The bill passed 321 to 62, and was co-sponsored by congressmen Robert Hurt (R-VA.) and Greg Meeks (D-NY). The bill, which would amend parts of Sarbanes-Oxley, now heads to the U.S. Senate, where it faces uncertain prospects.
Speaking on the House floor, Rep. Hurt said, “Europe is considering imposing an audit firm rotation regime, in part because it believes the U.S. will move forward."
The AICPA, audit firms, the Financial Services Roundtable and the U.S. Chamber of Commerce have argued against potential of mandatory rotation of auditing firms, saying there is no evidence that firm rotatioin would enhance audit quality.
In a statement, AICPA CEO Barry Melancon said... "The time has come to end the debate over rotation. In Europe, there is a misimpression that ... the U.S. is headed toward adoption of firm rotation." He said the House vote will help relive some of the confusion for economic leaders and businesses both in the U.S. and Europe.
The Congressional Budget Office has estimated that the costs of implementing a mandatory audit firm rotation system would cost the Government Accountability Office about $1 million.