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European Investors Push for Auditor Rotation

The European parliament recently received a letter from major investors demand

With the European parliament set to meet later this week, some of the continent's biggest investors have banded together to demand a change in the relationship between auditors and the companies they oversee.

According to Accountancy Age, the investors believe there are too few major audit firms currently operating, auditors don't provide sufficient warnings to be of use to investors, and there's not enough rotation between firms to keep auditors from becoming complacent in their assignments. One of the changes championed by European investors would have auditors rotate at least every 15 years, AA said.

"We believe there are a number of worrying features in the audit market," the investors wrote to the European parliament, AA reported. "At a fundamental level, we are concerned about auditor independence and professional skepticism."

The issue of auditor rotation has been up for debate for a number of months on both sides of the Atlantic. In May, James Doty, chairman of the Public Company Accounting Oversight Board, told a meeting of the American Institute of CPAs that it can be difficult for auditors to maintain a long-term relationship with a client and maintain objectivity.