Accounting News

Friday, December 2, 2011
Europe Looks to Require Rotating Auditors

The European Commission proposed rules to require public companies to change their auditors every six years. It also requires audit firms to separate their auditing and consulting functions.

This has a significant impact on not only European companies but US multinationals. It is even more significant for the biggest auditing firms of KPMG, Earnst & Young, KPMG, PricewarehouseCoopers, and Deloitte.

The goal is to improve competition in the audit market which has seen significant consolidation over the last three decades. It will also help to eliminate un-healthy relationships with companies and their auditors. The problem is that there are significant cost when bringing in a new auditor.

This is still just a proposal but something that is being considered in the US as well.

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