DAY 2: US audit committee chairs told a Public
Company Accounting Oversight Board (PCAOB) hearing that mandatory
audit firm rotation would undermine audit committees and diminish
the work done on improving corporate governance done since the
implementation of SOX.

PNC Financial services audit committee chair
Paul Chellgren, SanDisk audit committee chair Catherine Lego are
vehemently opposed to mandatory rotation.

Chellgren said the audit committee is best
suited to change an auditor and should not be forced to choose a
less qualified firm.

“Rotation would take a lot of the power given
by the SOX to the audit committee away,” he said.

Lego called on the PCAOB to not diminish the
role of the audit committee.

“Mandatory firm rotation will not improve
audit quality and enhance auditor independence and scepticism.
[The] institutional knowledge of auditors runs deep and we can’t
just lose that when there is no need to change the audit firm,”
Lego said.

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Audit committee chairs also called for more
guidance by the PCAOB for audit committees. Lego points out that
not all audit committee work as effectively as they should.

“We should have best practice examples to help
audit committees that are new to the role and processes,” she

Chellgren said to the PCAOB that it should be
more “proactive in the way you communicate with audit

Dell audit committee chair Alex Mandl, Stern
& Morley chairman Roderick Hills, Lorillard audit committee
chair and former BDO US chairman Richard Roede also opposed
rotation during the hearing.

The audit committee chairs called for an audit
committee charter, which would be a “good weapon” for the PCAOB to
ensure audit committees are of a high quality.

PCAOB chairman James Doty said the view of
audit committee chairs was amongst the most important and could
play a role in the board’s future decisions.