Accounting & Investing Info for San Antonio A & M
Monday Jan 23, 2012
A letter to the WSJ today makes the point that the first time an external audit firm performs an audit, they do due diligence and evaluate controls. As time goes on and they settle in however, they really become more of a joint venture partner with the firm, that professiional skepticism gets replaced with a similar perspective.
We hope to have an excerpt from Stephen Frey's Shadow Account which makes thispoint very well.
I agree. However, audit firm rotation might not be the ideal solution for this problem.
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It is a remarkable dilemma. Rotation would make sense if all auditing or at least most auditing was the same. But each industry is unique, and the time it takes to learn the industry in order to give a company a fair assessment has to be a major consideration before imposing a rotating requirement. I don’t see an easy solution here.
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Professor Elam 
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