Do you ever feel like our profession goes around in circles with the issues we face?\u00a0 We talk about a major issue, it creates all kinds of sound and fury, it goes away for a while and then returns? \u00a0The SEC\u2019s consideration of IFRS for domestic issuers is an issue that has been \u201cgoing around\u201d for years.\u00a0 \u00a0\u00a0The FASB\u2019s projects on leases, financial instruments, and revenue recognition are not the first time the board has addressed these areas.<\/p>\n
I think one of the theme songs of our profession could be Joni Mitchell\u2019s \u201cCircle Game\u201d:<\/p>\n
\u201cWe can\u2019t return, we can only look behind from where we came, and go round and round and round in the circle game\u201d<\/p>\n
(BTW, here is a great youtube video of her performing the song live:\u00a0http:\/\/www.youtube.com\/watch?v=AbIuC9hTY9Y&feature=kp<\/a> )<\/p>\n I think the number of times an issue goes around this circle is directly related to complexity and the level of controversy it creates.<\/p>\n One hugely controversial and complex issue which many hope will move to the low end of the cycle is mandatory auditor rotation<\/span><\/b>.<\/p>\n The PCAOB moved auditor rotation to the high end of the cycle back in August of 2011 with its Concept Release on Auditor Independence and Audit Firm Rotation.\u00a0 While it was only a concept release it stirred enormous discussion and controversy.\u00a0 Congress even got involved with the House passing a bill, although no Senate action occurred.<\/p>\n We have all been going round and round the auditor rotation circle.<\/p>\n As we come around the circle this month, the latest news on this front is that in the SEC\u2019s hearings about the PCAOB\u2019s budget last Thursday, in response to a question from Commissioner Gallagher, PCAOB chairman James Doty told the SEC:<\/p>\n \u201cWe don\u2019t have an active project or work going on within the board to move forward on a term limit for auditors or mandatory rotation project.\u00a0 It is not part of the budget – not budgeted in what you are approving today.\u201d<\/p>\n However, Doty added, the PCAOB would \u201ccontinue to think about what impacts independence.\u201d<\/p>\n (BTW,<\/a> you can listen to the recorded video webcast at:\u00a0http:\/\/www.sec.gov\/news\/openmeetings\/2014\/020514openmeeting.shtml<\/a>\u00a0It is entertaining and suspenseful as, \u2026, well, I am not sure what, but you should try it once!)<\/p>\n Perhaps this means that for the time being we will not be seeing any action on this front, at least for a while!<\/p>\n I suppose that this is not the last time this issue will come around.\u00a0 As you may have heard, the EU is moving forward with a rotation proposal.<\/p>\n Considering how all this works, maybe the theme song should be \u201cThe Wheels on the Bus go Round and Round\u2026.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":" Do you ever feel like our profession goes around in circles with the issues we face?\u00a0 We talk about a major issue, it creates all kinds of sound and fury, it goes away for a while and then returns? \u00a0The SEC\u2019s consideration of IFRS for domestic issuers is an issue that has been \u201cgoing around\u201d … Continue reading \u2018Round and \u2018Round the Auditor Rotation Circle<\/span>