Mandatory Audit Firm Rotation – a Literature Review Essay

MANDATORY AUDITOR ROTATION: A WAY FOR REGULATORS TO PREVENT AUDIT FAILURES? 1. Introduction Auditor rotation has long been a subject of debate as a measure to prevent audit failures, especially after the financial crisis. Two types of rotation suggested are firm rotation and audit partner rotation. Mandatory auditor rotation limits the number of consecutive years that a registered public accounting firm or audit partner can serve as the auditor of a company, and is claimed to be able to enhance…

Mandatory Audit Partner Rotation, Audit Quality, and Market Perception: Evidence from Taiwan* WUCHUN CHI, National Chengchi University HUICHI HUANG, Syracuse University YICHUN LIAO, National Taiwan University HONG XIE, University of Kentucky 1. Introduction Mandatory audit partner rotation has existed in the United States since the 1970s, when the American Institute of Certified Public Accountants (AICPA) required that audit partners in charge of Securities and Exchange Commission (SEC) audits be…

Mandatory Audit Firm Rotation In a free and open market, listed companies are required by law to provide their stakeholders with financial information that is credible. One method that can be used to obtain a trustworthy and objective financial reporting is through statutory auditing. However, the recent financial scandals and crisis have renewed concerns regarding the tenure of auditors and its impact on their audit quality and independence. Regulators and other experts have become concerned that…

the impact of mandatory rotation of audit firms to ensure the appropriate level of ‘independence' of auditors. Majority of studies conclude that the detrimental effects of firm rotation on the quality of the audit work by far outweigh its positive effects as a safeguard against various independence and quality threats. Frequent changes of audit firms, whether resulting from mandatory rotation or otherwise, introduce threats to independence and operational difficulties that make audit failure more…

Audit Firm Rotation - should it be mandated? Why or why not? What are the advantages and disadvantages to the clients? What are the advantages and disadvantages to the audit firms? Who is considering mandating audit firm rotation? Why? How do the AICPA and NJSCPA respond to this possible mandate? Which federal agency has the power to enforce audit firm rotation? BackgroundTop of Form The Public Company Accounting Oversight Board (POACB) is thinking of mandating Audit Firm Rotation since, according…

Survey finds internal audit risk assessments inconsistent Year: August, 2007 The report suggests that internal auditing needs to identify areas of high and moderate risk that are part of the internal audit plan but have been deferred or cancelled because of the organization's focus on Sarbanes-Oxley Section 404. It recommends that chief audit executives (CAEs) revisit the budgets, skills, and capabilities needed to achieve a comprehensive, balanced, and risk-based approach to auditing, as well…

Audit Partner Rotation - Issue Brief In response to the wave of corporate crises, the Sarbanes-Oxley Act includes a provision regarding mandatory audit partner rotation for firms auditing public companies. This should not be confused with audit firm rotation and it is important to make the distinction. The Act requires the lead audit partner and audit review partner (or concurring reviewer) to be rotated every five years on all public company audits. The Act requires a concurring review of all…

v i n n o va r e p o r t vr 2009:06 managing and organizing for innovation in service firms A literature review with annotated bibliography annika schilling & andreas Werr stockholm school of economics Title: Managing and Organizing for Innovation in Service Firms. A literature review with annotated bibliography Author: Annika Schilling & Andreas Werr - Stockholm School of Economics Series: VINNOVA Report VR 2009:06 ISBN: 978-91-85959-47-1 ISSN: 1650-3104 Published: Februari 2009 Publisher: VINNOVA…

Mandatory Audit Firm Rotation – A Literature Review Introduction Since the passing of the Sarbanes-Oxley Act of 2002, much debate has occurred concerning mandatory auditor rotation for publicly held companies. Most corporate scandal involves dishonest or questionable accounting. This realization has brought about the priority to take more measures are taken to assure companies disclose the most reliable financial information. It is believed that a lack of auditor independence may be to blame…

Audit Expectation Gap & Audit Rotation A Critical View Auditing is one of the most critical fields where the external auditors are always subjected to criticism and legal regulations which are mostly directed against them. Mostly this criticism arises because of lack of sufficient understanding of how the company law and auditing standards work and also due to related misconception about the actual role of an auditor (Porter, 1993). This lack of understanding is called expectation gap where the…