You Complete My Audit
Amid the tumult
of Sarbanes-Oxley and thorny auditor-client issues lie long-lasting
relationships, some that have endured for more than 50 years.
The
relationship between accounting firms and their corporate clients has been
shaky over the past decade, to say the least. In the wake of the
Sarbanes-Oxley Act, accounting firms dumped some risky clients, shuttered
ancillary consulting arms, and raised fees. That strained the collegial bond
between firms and their clients.
More
recently, as we reported last month (“Auditing your auditor”),
fees have dropped and it has become very much a buyer's market. At the same
time, companies are demonstrating a new willingness to switch auditors. Last
year, 1,331 public companies changed auditors, according to Audit Analytics;
82% of the time the client initiated the switch, versus the auditor dropping
the account.
But
amid all that tumult, many unions have endured — sometimes for more
than a century. The longest-running relationship on record is between
Deloitte & Touche and Procter & Gamble, which has employed only one
primary audit firm since its incorporation in 1890. Indeed, to crack the list
of the 100 longest-lasting auditor-client relationships, your company would
need to have used the same firm for more than 50 years.
Sarbox frowned on cozy
auditor-client relationships by instituting the auditor-rotation rule, which
requires lead audit partners to move off an account after five consecutive
fiscal years. Lawmakers have occasionally toyed with the idea of also
requiring companies to switch audit firms every few years, to further
increase independence. Companies and auditors have both pushed back, arguing
that the costs would outweigh the benefits and further cramp competition by
limiting an already small pool of viable auditors. If such a rule ever did
come to pass, it would spell an end to some very long-standing relationships.
Article was earlier published in one of the reputed
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