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“Investors believe the long term that auditors hold office can impact their independence and objectivity and is something that needs to be addressed. But our preference is a mandatory tendering requirement along the lines proposed by the Financial Reporting Council.
“The majority of investors consider a requirement to rotate an auditor after an arbitrary period of time ‘mandatory rotation’ is undesirable. Such a requirement could mean that companies are forced to change auditor at a time when the existing auditor’s familiarity with the business would benefit the audit such as when there is a major acquisition or merger. It could also conceal the fact that an auditor has stood down for a particular reason and prevent an auditor being reappointed when they are the preferred choice of both management and investors.
“It should be for a company, possibly through its audit committee of non-executives, to decide the best time to change auditor in conjunction with its shareholders/investors. A mandatory rotation requirement disenfranchises both.”