Accounting Firms and Tenure

There is radical talk in the EU that auditors for public companies will be subjected to mandatory rotation.   That is, mandatory rotation of the firm, not just the lead partner.  

So what sort of tenure for auditors is typical in the United States?  Hat tip to Lynn Turner for this information.  It turns out that the average tenure for the 500 largest companies is 21 years.  Moreover, 59% of the Fortune 1000 have had the same auditor for more than 10 years, 37% for more than 20.  Mandatory rotation were it to be applied in the US would, therefore, result in a significant change.

With all of this concern over accounting firm tenure, we note that the staff of the SEC has taken the position under Rule 14a-8 that proposals can be excluded if they seek shareholder approval of the outside auditors.  While most companies voluntarily submit this matter to shareholders, some do not and when shareholders have tried to overturn the omission, the staff has intervened and allowed the shareholder proposals to be excluded.  That issue is developed in Essay: The Politicization of Corporate Governance: Bureaucratic Discretion, the SEC, and Shareholder Ratification of Auditors