The Securities and Exchange Commission (SEC) has revised a regulation on the turnover of auditors, stipulating listed companies change auditors every seven years and disallowing use of the same auditors for five years, effective early next year.
In addition to complying with an international standard, the move is aimed at supporting independence of financial auditors and enhancing investor confidence in using financial reports to make investment decisions, said the SEC.
Listed companies are allowed to change financial auditors every five years, and the period prohibiting the use of the same auditors is two years.
"Financial reports are very critical for investors' decision-making process and auditors' independence plays a vital role in auditing and reviewing financial statements. These factors are important in helping financial reports to have credibility," said SEC secretary-general Rapee Sucharitakul.
"The SEC has to adjust the regulation to be compatible with changes in the international standard."
There is a grace period to lessen the impact at the beginning of the regulatory enforcement phase, which runs from 2019-2022.
The SEC will allow listed companies to use the same auditors, with a limit capped at three audit years.
If an auditor is under the jurisdiction of a small auditing office, such auditor is allowed to perform its duty for more than seven auditing years, but must not exceed nine auditing years.
The market regulator also issued a guideline for listed companies' audit committees as a standard for considering the rotation of auditors and to encourage audit committees to appoint independent persons to serve as auditors.
