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ARTICLE · 22 JANUARY 2014

EU Agreement On Auditor Rotation May Affect U.S. Companies

Morgan Lewis
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The European Parliament and the EU member states recently reached a preliminary agreement on auditor reform. The agreement includes a provision mandating auditor rotation every 10 years for listed companies, banks, and insurance companies, with extensions for 10 years, if the engagement is put out for public bid, and 14 years, if the audit is conducted by multiple firms.

United StatesAccounting and Audit
Linda Griggs
Linda Griggs
Sean Donahue
Sean Donahue

The European Parliament and the EU member states recently reached a preliminary agreement on auditor reform. The agreement includes a provision mandating auditor rotation every 10 years for listed companies, banks, and insurance companies, with extensions for 10 years, if the engagement is put out for public bid, and 14 years, if the audit is conducted by multiple firms.

The Center for Audit Quality (CAQ) is concerned that the preliminary agreement, which was reached in December 2013, could adversely affect U.S. public companies with EU subsidiaries that are listed on a European exchange or that are banks or insurance companies. The CAQ is an autonomous public policy organization dedicated to enhancing investor confidence and public trust in the global capital markets.

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