Senior executives of Ernst & Young LLP, KPMG LLP and otherlarge accounting firms said regulators should back away from aproposal that public companies be required to rotate theirauditors.

The Public Company Accounting Oversight Board, the nonprofitthat regulates auditors of U.S.-listed companies, is weighingmandatory term limits to combat auditor bias toward longtimeclients. Chief executives and other leading officials at theso-called Big Four firms criticized the rotation proposal today ata meeting in Washington, arguing it would hurt the quality ofaudits.

“It is not a necessary or constructive means to promote auditorskepticism, and we are aware of no evidence suggesting that it willimprove audit quality,” said Stephen R. Howe, managing partner ofErnst & Young in the U.S., in remarks submitted to the board.Howe, who pointed out most of the 630 comment letters to the PCAOBwere against rotation, said the change would cause higher costs anddisruptions.

Auditor rotation is one of several ideas under debate at thePCAOB, a watchdog overseen by the Securities and ExchangeCommission after being established by the Sarbanes-Oxley Act in thewake of the collapse of Enron Corp.

PCAOB Chairman James R. Doty has repeatedly pointed to thedangers of auditing firms getting too comfortable with clientsthey've retained for decades.

“Well-intentioned auditors, as with other people, sometimes failto recognize and guard against their own unconscious biases,” Dotysaid.

“It's obvious that we're all aware of lapses in auditorperformance,” said Paul Volcker, former chairman of the FederalReserve, who said PCAOB inspections are finding “indications ofdivided loyalties and inattention” at the firms. “Regular auditsshould not become a sort of long-term annuity for the accountingfirm.”

The accounting firms — including Deloitte LLP, KPMG andPricewaterhouseCoopers LLP — contend the rotation proposal isburdensome and unnecessary.

“There is no evidence that among the root causes of thefinancial crisis was a failure of the accounting profession toaudit adequately,” said Robert Moritz, chairman and senior partnerat PricewaterhouseCoopers, in written remarks. “There has been nosupport for the proposition that mandatory firm rotation is theright way to improve audit independence.”

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