Is the concept of Auditor Rotation of concern to Accountants and Auditors?

This proposal impacts auditors of public companies - primarily the "Big 4" - not individual practitioners who often specialize in tax services. Affected auditors and their industry counterparts are concerned about the prospect of higher costs and lower quality due to reduced expertise.

"As the PCAOB continues to explore the issue of mandatory audit firm rotation, the AICPA is urging careful study by the board and has cautioned that requiring periodic rotation of auditors would have costly and unintended consequences without increasing audit quality. “You really have to understand a client’s business to audit it effectively, and that takes, in some cases, one, two, or three years,” Caturano said. “If you need to have a different firm gaining that understanding every six, seven, or eight years, to me that doesn’t make any sense. To me, what makes sense is a long-standing relationship managed by an audit committee that understands the importance of independence.”

http://www.journalofaccountancy.com/Issues/2012/Nov/20125963

If you have worked with auditors in the past you know that the cost of switching auditors is expensive and includes the cost of the auditor getting to know the client and teaching its staff to audit the company. Training and getting up to speed costs get reduced over time.

The PCAOB is a legislated body, their rulings are law. That means that while they may seek comment, and practitioners may respond with comment letters, the best response by the accounting industry is in force, meaning with the help of the AICPA and other associations to bring to bear an effective lobby for or against any change.

Here are the documents at the PCAOB related to the ongoing discussions
http://pcaobus.org/Search/Results.aspx?k=auditor%20rotation&s=Entire%20Site

Essentially the issue is "Auditor Independence." Over time one of the threats to auditor independence is being too close to the client - becoming too familar with operations and relationships so as to remove an auditor's ability to remain skeptical. CPA firms are required to consider threats to their independence but it isn't so easy to look in the mirror and spot where you are too close to a relationship. The idea is that auditor rotation would keep a fresh set of eyes on the audit client constantly, however because it is so costly to open a new client file so to speak, there is a high cost for all the firms and inefficiencies for the client being audited. Everyone would have to constantly retrain the teams and never really get comfortable with the particular industry, and the danger is that if there is too much rotation, you will have audit firms auditing industries they do not understand and are essentially less qualified to opine on.

You cannot compare the comment letters to the total estimated auditor positions at the BLS that is not an effective way to look at the issue given that most auditors are probably internal auditors or have less than 5 years in the seat making them unqualified to submit such commentary.

Qualified comments come from the big firms and the AICPA and those who are recognized industry leaders including those from industry itself. Many times it is the comments regarding detriment to the Industry Businesses that carry the most weight, not from the CPA audit firms.

Note that the PCAOB does not consist of educated auditors, so the accounting industry must work constantly to educate the current board as to the effects of their proposed rulings. Sort of like an audit committee in a company, most of those people are not even industry experienced, they are wealthy so they are asked to sit on the Board of Directors and sometimes get allocated to the Audit Committee. Once I was setting up internal controls at a bank and one of the audit committee members was a medical doctor. He was a long time friend of the Chairman so was a long time member of the Board of Directors. He had absolutely no business on that Board, but hey what do you do?