An article in Accounting Today ("Auditor Rotation Rules Could Lead to Dissatisfied Clients") about audit firm rotation indicates that a poll by U.K.-based Source Global Research found that two-thirds of senior executives were dissatisfied 2 years after they switched auditors. Having spent much of my career debating independence in the audit profession, I am dumbfounded that some still do not know for whom an audit is performed. And no matter how many times regulators remind auditors that the independent audit is performed for the benefit of shareholders -- aka "the client" -- we just don't seem to get it.
A quote in the article even states that "changing auditors is designed to increase client satisfaction.." which, unless "client" means the company's shareholders, does not hold water. The purpose of audit firm rotation, plain and simple, is to remove the familiarity threat that can take hold when a firm audits the same client for many years and enhance independence. We do have partner rotation in this country for public companies and that alleviates the same threat, so I am not proposing or opposing firm rotation. I just wish we as a profession could keep our heads in the right place when it comes to the auditor / client relationship and acknowledge that: (1) shareholders come first, and (2) management is not king, despite the way our public company audit system is currently structured.
Lest we want to move to a government audit model, which (sadly) I'm not convinced I won't see in my lifetime.