I don’t know whether it was the surprising study they did on the sad state of professional boxing, but I’ve suddenly become a “junkie,” of sorts, for the daily reports issued by the General Accounting Office. 

Each business day I anxiously check the Web site of the auditor general and scour the reports for any vital findings that affect the profession in this climate of corporate reform.

I’ve actually placed a translucent protective cover on the organization’s report on the Sweet Science and have been stockpiling several of the organization’s other lengthy findings from its discussion of audit firm consolidation to its recent treatise on the Internal Revenue Service’s financials.

Which brings us to last week’s report on the feasibility and logistics of mandatory audit firm rotation as a method to assure independence.

As anyone who has studied Sarbanes-Oxley 101 knows by now, the reform act required that audit partners be rotated on a five-year basis, so as not to blatantly cross, or even blur, any potential lines of audit independence.

But if the audit firms were subject to similar rotation schedules, would that be efficient in terms of costs vs. benefits?

No, says the GAO in a 98-page report.

The GAO found that nearly all the largest public accounting firms and Fortune 1000 publicly traded companies it surveyed for the report indicated that the costs associated with audit firm rotation are likely to exceed the benefits.

Now, skeptics would hardly be surprised at that finding. After all, the large companies would get stuck with the check for additional costs.

But interestingly enough, GAO found the views of stakeholders, such as institutional investors and banks to be “consistent with the views of the respondents to the survey.”

The auditor general stated that any benefits achieved by auditor rotation, when weighed against “additional financial costs and the loss of institutional knowledge of the public company’s previous auditor of record, are harder to predict and quantify.”

That’s GAO-speak for we have no clue what will happen, except that it will cost more.

Most of those participating in the survey indicated that Sarbanes-Oxley’s requirements regarding audit partner rotation, and auditor independence would achieve the same benefits as firm rotation.

The auditor general determined that “several years’ experience with the implementation of Sarbanes-Oxley is needed before the full effect of the act’s requirements can be assessed.” It also recommended that the Securities and Exchange Commission and the Public Company Accounting Oversight Board keep score on SOX’s existing independence requirements.

That’s also GAO-speak for let’s all check back in a year or two.

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