As part of some new corporate governance initiatives, the California State Teachers' Retirement System (CalSTRS) Investment Committee will challenge companies that have used their current audit firm for extended periods of time - in particular, those engagements measured in decades rather than years (i.e., 75 or more). The pension's investment committee plans to discuss auditor independence, audit reporting and disclosure with approximately 40 - 50 companies fitting this profile.
Acknowledging there are only four major firms and unlike the European Union, no requirement that a company rotate its audit firm after a certain period of time, a portfolio manager with the CalSTRS corporate governance unit stated that the investment committee may recommend a "no" vote against re-election of board members if post-engagement, a company fails to change its audit practices.
