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June 11, 2012

PCAOB to resume audit firm rotation debate

The US Public Company Accounting Oversight Board (PCAOB) has announced it is to hold a second public meeting to discuss ways to enhance auditor independence, objectivity, and professional skepticism, including through mandatory rotation, or term limits, for audit firms.

The second meeting will be held 28 June in San Francisco.

The PCAOB already held a meeting discussing these measures in March, where most stakeholders widely opposed mandatory audit firm rotation. However there was more support for measures such as capping the maximum time that a firm can use on audit firm and adopting the comply and explain principal.

The US Congress has also threatened from banning PCAOB from introducing mandatory rotation.

PCAOB chairman James Doty said this is a complex subject that raises important issues about how to fulfill the audit’s core purpose.

“I look forward to building upon the constructive discussion started with the comments received on the PCAOB concept release and the public meeting in Washington earlier this year,” he said.

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