67% of CFOs Believe SEC Should Revise 8-K Rules
In a national survey of CFOs and senior comptrollers conducted by Grant Thornton LLP, the U.S. member firm of Grant Thornton International, 67 percent believe that the United States Securities and Exchange Commission (SEC) should revise 8-K rules to require reasons for all company dismissals of auditors, for all auditor resignations and for all instances in which the auditor chooses not to stand for re-election.
Last spring, Grant Thornton called on the SEC to amend outdated policies regulating form 8-K required disclosures and communications related to audit firm changes.
Speaking at the Outstanding Directors Exchange (ODX), Cono Fusco, managing partner of strategic relationships at Grant Thornton LLP, explained that the current 8-K regulations require companies to give a reason for changing auditors only when there is a disagreement between the company and the external auditors, or when one of four "reportable events" occur. He noted that some companies voluntarily report other reasons, but there is no standard for such reporting.
"The lack of required transparency perpetuates old thinking that an auditor change signals a negative event, thus concealing many other beneficial reasons for changing audit firms," Fusco said.
"The SEC and the capital markets need to recognize the reality that more companies are changing audit firms over the past five years - seeking a better combination of quality, service, value and reach," he said. "There are many legitimate business reasons motivating audit firm changes, and these reasons must be communicated to investors."