And audit firm rotation does not resolve the fundamental, "inherent conflict" that was mentioned so often during the PCAOB's open meeting:
The auditors are paid directly by the companies they pass judgment on.
That's the same conflict ratings agencies have. The ratings agencies were vilified as crisis culprits for allowing worthless mortgage securities to spread throughout the banking system. They have also been stripped recently of their exclusive, monopolistic government franchise to produce required ratings.
That's not to say that long, close auditor-company relationships don't obviously result in close, deep personal relationships, potential bias, loss of independence and objectivity, and even possibly collusion and complicity in achieving common goals - to keep the companies alive.
Just look at some of the banks and bailout recipients from the crisis and their auditor relationships:
AIG and PwC
- 35+ years including being sued by shareholders multiple times and settling
GM and Deloitte
- 90+ years including being sued by shareholders and a bankruptcy