In addition, the results of the research are of interest to the Brazilian regulatory agencies, enriching the discussion about the maintenance of mandatory audit firm rotation
Though regulators and standard setters in many countries do not require mandatory audit firm rotation
, yet MAR can be considered as one of the potential solutions to increase AQ by enhancing auditor independence (L.
On the other hand, there have been different discussions about the issue of mandatory audit firm rotation
. The opponents of audit firm rotation believe that the costs of mandatory audit firm rotation
are so high.
The Impacts of Mandatory Audit Firm Rotation
on Audit Quality
Mandatory audit firm rotation
. PIEs must rotate audit firms every 10 years, although member states have the option to extend the mandatoiy rotation period to 20 years provided that a public "tender" is conducted at the conclusion of the 10-year period, or 24 years if a "joint audit" is performed (i.e., two audit firms sharing responsibility, though not necessarily equally, to produce a single joint auditor's report).
The GAO surveyed the leaders of 97 public accounting firms with 10 or more SEC clients to get a greater understanding about various facets of mandatory audit firm rotation
. (12) The results were inconclusive about the benefits of audit firm rotation, but the potential costs were considerable.
EU member states approve mandatory audit firm rotation
. The new regulations and amendments approved include a requirement that audit firms rotate engagements with public-interest entities every 10 years - with provisions for longer periods when engagements are put out for bid or joint audits are performed.
For the negotiators, the main bone of contention remains the implementation of the concept of mandatory audit firm rotation
. Although in agreement on the principle, Parliament and Council have until now diverged on the maximum duration.
In recent years the PCAOB has considered the idea of implementing mandatory audit firm rotation
, going so far as to open the issue up for debate.
This paper discusses the major trends in scholarship about the influence of mandatory rotation on audit quality, the negative consequences rotation might have for the client-specific expertise of the auditor, the real effects of mandatory audit firm rotation
on audit quality as evidenced by the effects on financial reporting, and the effect of mandatory audit firm rotation
on perceptions of audit quality.
(18) However, Sarbanes-Oxley also required the Government Accounting Office (GAO) to investigate the wisdom and viability of mandatory audit firm rotation
(MAFR) and to provide Congress with its findings by July 30, 2003.