You may remember that last Wednesday I put my grown-up clothes on and attended the PCAOB's open meeting on auditor rotation. It was a good discussion (relatively speaking) and I got chat with some pretty smart people. I can't work a room of old white men like Adrienne (few can), but Chairman James Doty seemed to like the name of the website and I got to see some Big 4 flaks that I like.
Anyway, it wasn't really a surprise that Big 4+1 came out against the idea of rotation. They did so in diplomatic CEO fashion, which was also expected. Afterwards, everyone mingles like they're old friends and act like one firm isn't stealing all the other's talent and that they really enjoy Francine McKenna's work. It was great!
Meanwhile, somewhere on K Street, there were people working the phones, telling members of the House Financial Services Committee that auditor rotation is not only an awful idea but it's tantamount to an assault on freedom. Scott Garret (R-NJ) said as much during a hearing yesterday where Chairman Doty was questioned about the proposal:
"I am very concerned about some of the recent activist proposals put forth by the PCAOB," said New Jersey Republican Scott Garrett, chairman of the panel that held the hearing.
This kind of rhetoric is to be expected from the most conservative member of the New Jersey delegation who represents rural New Jersey and has been a politician for the last 20+ years, but let's not pretend like Rep. Garrett has been on the forefront of accounting and auditing policy. Tim Tebow probably knows more about growing Mauwie Wauwie than Garrett knows about accounting and auditing. But that doesn't stop him from sitting in chair and calling Doty & Co. "activists," like they're a band of flag-burners. The only logical conclusion here, obviously, is that a lobbyist (from U.S. Chamber of Commerce probably) "educated" Mr. Garrett to the ills of auditor rotation and that he owed it to his constituents to stand up to the PCAOB. They hand him a script that a 3rd grader could understand and he marches out. Garrett gets a nice little soundbite out of the deal but, honestly, Michael Fitzpatrick (R-PA) really takes the cake on this:
One Republican, Michael Fitzpatrick of Pennsylvania, has already drafted a bill that would strip the PCAOB of the authority to require rotation.
“Our economy is in the slowest economic recovery since World War II,” Fitzpatrick said. “And what the American people need is for the economy to grow in the private sector and create jobs. What the people do not need is their own government getting in the way of that economic recovery and private sector job creation.”