The VSCPA has sent a letter to Rep. Robert Hurt (R-Va.), a sponsor of H.R. 1564, the Audit Integrity and Job Protection Act, expressing support for the bill.
The bill would limit the Public Company Accounting Oversight Board (PCAOB) from requiring mandatory audit firm rotation for public company auditors.
The VSCPA wrote: “We are concerned that mandatory audit firm rotation (MFR) could have unintended consequences and ultimately reduce audit quality. MFR could obstruct the accumulation of knowledge and experience upon which an audit firm develops an understanding of a specific company’s operations. It may also increase the potential for higher audit risk during the first year of the audit engagement for a new audit firm.”
The VSCPA also noted a lack of evidence that mandatory rotation would improve audit quality while predicting that rotation would likely “harm audit quality, cost businesses, disrupt the economy and create other unintended consequences.”