The Israel Securities Authority proposal to require Israel's publicly traded companies to rotate their auditors every five years has run into an unexpected snag. A recent report published in the United States, yet another aspect of the fallout from the accounting scandals, recommended avoiding such a step. One possible conclusion is the great and wise U.S. thinks mandatory rotation is a mistake, so it is one. Another is that U.S. regulators are under as much pressure as Israel's, or even more so.

One may be permitted to suspect that American legislation is not perfect. And yes, Israel can usually learn from it, including that article enacted after the Enron implosion forcing accountants to take a breather before joining any company they had audited.

This week that cooling-off period exploded into a burning issue here, when CPA Rakefet Russak-Aminah, one of Israel's most renowned accountants, abandoned the prestigious accounting firm of Somekh-Chaikin for the charms of Bank Leumi (TASE: LUMI).

Now, Russak-Aminah had not handled the Bank Leumi account at Somekh-Chaikin. Nor did she handle the accounts of Bank Hapoalim (TASE: POLI), Israel Discount Bank (TASE: DSCT), Union Bank of Israel (TASE: UNON) or First International Bank of Israel (TASE: FIBI), all of which Somekh-Chaikin handles.

Somekh-Chaikin points that out, while arguing that the American standard shouldn't be applied to Russak-Aminah's case. "As CEO of Somekh-Chaikin, Russak-Aminah's business was mainly administration. She had nothing to do with the accounts of the banks the company handles," Somekh-Chaikin commented.

That claim is badly weakened by the fact that she was, however, CEO of Somekh-Chaikin, the second-biggest cheese to managing partner Gad Somekh. She must have obtained knowledge of the banks' affairs, given their status in the company's portfolio.

Whatever information Russak-Aminah obtained, however sweeping or limited, passes with her to Bank Leumi. Her move renders the question regarding separation of auditors and customers all the more acute. One part of the problem is that the relationship between auditor and company can lead to job offers. Another part is the commercial exposure of the audited firm, in view of the criticism the auditor's shift may arouse among rivals. And when the auditor goes to work for a rival, the questions begin to be screamed.

The ones who should have screamed the loudest are the other banks. What should Bank Hapoalim think, after exposing its innards to its auditors, only to find that the auditor's CEO has gone to work for a rival bank? One might expect Bank Hapoalim, or Discount or Union or FIBI, to loudly object.

Yet they did not. They are not bothered by the fact that all are handled by the same accounting firm, and seem equally unmoved by the move of the firm's CEO to Bank Leumi.

Why bother to berate auditors for impairing their independence if the customers do not care? By the same logic, given how warm and fuzzy the banks feel at being handled by a single auditing firm, this entire article is pointless. And if the customers don't care, the ISA decision about mandatory rotation is totally bereft of value, just as the Americans said.