Congress has decided to join the fray over mandatory audit rotation with an amendment to Sarbanes-Oxley to block the Public Company Accounting Oversight Board from writing a new rule limiting auditor tenure.

A six-line amendment to the Sarbanes-Oxley Act of 2002 proposed by Republican Rep. Mike Fitzpatrick of Pennsylvania would say the PCAOB should have no authority under the law to require that audits be conducted by a specific auditor or that audits be conducted by different auditors on a rotating basis. The House Financial Services Committee has scheduled a hearing for Wednesday, March 28, to hear from the PCAOB, the Securities and Exchange Commission, the Financial Accounting Standards Board, and at least three other experts likely to speak unfavorably about the prospect of auditor rotation. The PCAOB had no immediate comment on the legislative proposal.

The PCAOB just concluded two days worth of roundtable meetings to explore whether some system of mandatory rotation would cause auditors to become more independent of their public company clients, and therefore more objective and more skeptical. The PCAOB published a concept release asking for views on mandatory rotation or other measures to shake some independence, objectivity, and skepticism out of the auditing profession.

The European Union is proposing a rotation mandate that would limit audit firms to six years and require a four-year cooling off period before they could be rehired. The EU measure also would require audit firms to segregate their audit and non-audit services into separate legal entities to form audit-only firms.

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