Votes in support of audit committee directors and the external auditors have been declining for some companies. Why? Because some investors and proxy voters have determined that a time limit for an audit relationship is necessary.
We believe that the diligent monitoring and periodic evaluation of an audit firm by independent directors of the company’s audit committee supports an informed decision on auditor selection, rather than relying primarily on a term limit. Voting against audit committees and audit firms primarily based on the tenure of the audit firm may result in unintended consequences.
We encourage audit committees and investors to engage on this issue to ensure there is a full understanding of the reasons and the work audit committees perform in recommending auditors.