The U.S. House Financial Services Committee has approved a bill that would ban a mandatory change in auditors at companies every few years, as debated by the Public Company Accounting Oversight Board (PCAOB) to promote independence.
Some observers believe that requiring companies to change auditors would prevent a too-close relationship between the firm and company leaders, but Big Four firms have strongly opposed the idea. The committee agreed and decided that the companies should be the ones to decide which accounting firms should audit a company’s financial statements, Reuters reported.
The bill would prevent the PCAOB from “imposing rules that would cause significant disruption and financial cost to our companies,” said bill co-sponsor U.S. Rep. Gregory Meeks, a Democrat from New York, according to the Wall Street Journal. He called mandatory auditor rotation “unworkable” because most big companies can only choose among the Big Four firms. The bill now advances toward a vote in the House.