The article makes some good points, but I think the idea of having shareholders vote on audits is somewhat impractical. How many individual or institutional shareholders actually get that involved in corporate governance? Realistically what will happen is that the vote will more or less reflect the wishes of management and the board that actively oversees the corporation. The recent debate over executive compensation (and shareholder revolts) shows that there is a pretty big chasm between what some people think shareholders can do about corporate policy and what they actually end up doing.

And that's with a tangible, red-meat type of thing such as CEOs making billions of dollars. An audit report is a much more abstract concept than that -- it's like an annual check-up. It's hard to quantify the value of an annual check-up for a healthy person. How many young healthy people skip annual check-ups to save money or because they just don't make the time for that? Intellectually we know that early warning and prevention is much cheaper and more efficient than waiting until you actually have a serious problem to start dealing with it, but it's easy to dismiss the importance of it when you haven't had problems in a while.

I think what could happen is that, in the absence of the audit mandate, companies that have strong track records of financial success and solid reputations may forgo comprehensive audits or limit them to once every few years or so and instead have annual reviews. The shareholders are going to sign off on whatever approach management and the Board suggests as the best course of action. This will probably save these companies time and a bit of time and money but it won't make audits more effective because... well, why would it?