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EU Audit Rotation Proposal Will Affect U.S. Companies Too

Tammy Whitehouse | January 7, 2014

Auditor rotation won't be required anytime soon in the United States, but audit experts warn that a push for mandatory rotation in Europe will have serious ramifications for many U.S. companies.

Member states of the European Union have agreed to an audit reform package that would require “public interest entities” to put audits out for bid at least every 10 years and retain the same audit firm for no more than 20 years. Under the EU definition, a public interest entity includes any company listed on an EU exchange, but it also includes companies in the financial sector, such as banks or insurance companies.

The reform package also includes a ban on certain non-audit services that audit firms would be allowed to provide to their audit clients, along with a cap on permitted non-audit services. Under the cap, the fees charged for non-audit services would not be allowed to exceed 70 percent of audit fees.

The Public Company Accounting...

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