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A third reason for questioning the auditor rotation requirement is that theaccountingprofessionprofessedlukewarmsupportforthelimitedrotationrequirement. That fact ironically stands as a testament to the requirement’s weakness.The AICPA submitted comments on the proposed requirement to the SEC ina sixty-two-page letter on January 9, 2003. The letter agreed with and supportedthe objectives of the Congress and the SEC in requiring partner rotation. Itpointed out that the AICPA had required lead audit-partner rotation for the pasttwenty-five years. It recognized the importance of a ‘‘fresh set of eyes,’’ butmaintained that the benefit must be balanced with the cost of continuity and‘‘institutional knowledge’’ (AICPA ).Most notable about the letter was that it stressed the AICPA’s objectionsto audit-firm rotation—the very concept that I believe is critically needed andconspicuously absent from the requirements of Sarbanes-Oxley. The letter stated36. See AICPA (1978, pp. 1–5). While the prior lead partner-rotation requirements specified aseven-year period prior to rotation, the original rotation requirements developed by the SECPS speci-fied a five-year rotation period.157ETHICAL GUIDANCE AND CONSTRAINT
that ‘‘audit firm rotation has significant costs that far outweigh the potential ben-efits.’’ The costs cited were increase in audit failures, increased start-up costs,increased difficulties in timely reporting, loss of institutional knowledge, oppor-tunity to disguise voluntary rotations, reduced incentives to improve efficiencyand audit quality, and a sharp increase in time and resources dedicated to pro-posal process (AICPA ).There are many possible reasons to explain the AICPA’s vehement objec-tions to audit-firm rotation, and some of them likely are based in political, finan-cial, and economic realities. It is common knowledge, for example, that theAICPA is heavily represented by members of the Big Four accounting firms and,as a result, are necessarily sensitive to protecting the interests of those firms.This mutually dependent relationship was affirmatively acknowledged in 2003 byCharles Bowsher, a former partner at Arthur Andersen who served as comptrollergeneral of the United States for fifteen years and also as chairman of thePCAOB. In an interview with the editor-in-chief of theCPA Journalabout theAICPA’s reaction to the Sarbanes-Oxley Act, he stated:I’m not sure if the AICPA is leading the Big Four or the other way around.The morale of all CPAs about their profession has sunk so low over the lasttwo years, and to a great extent it is because the leaders of the big firms andthe AICPA have undertaken initiatives that turned out to be disastrous. TheAICPA has become a big public relations and lobbying machine. It does agood job with some of its education programming, but its involvement withauditingandprofessionalstandardssettinghasbecomede-emphasized(Morris ).