Does the rotation of auditors improve the quality of auditing? - Essay Example

Only on StudentShare

Extract of sample
Does the rotation of auditors improve the quality of auditing?

In the provisional report released by the panel, it was proposed that, for there to be audit quality, audit firms must be rotated periodically (Whitehouse par. 4). This proposal by the U.K. Competition Commission is in line with the United States Public Company Accounting Oversight Board’s (PCAOB) concept, which proposed compulsory rotation of audit firms. According to PCAOB, the proposed regulation would set a threshold on the number of years that a registered public audit firm could act as the auditor of a public company, noted Bhika and Francis (par. 2). This proposal came about out of the increasing need to improve audit quality in both the U.K. and the U.S. Audit quality, according to Arter (3) is a process involving a systematic examination of internal and external auditor’s quality system. Audit quality is seen as an important part of quality management system in an organization. Quality audit ensures that audit companies perform their duties objectively, and independently. Therefore, the U.K. Competition Commission and PCAOB believe that rotation of auditors of public companies will help increase competition among audit firms, which will also increase the quality of audit. ...Show more

Summary

Does The Rotation Of Auditors Improve The Quality Of Auditing? As the economy of the United Kingdom struggles to recover from the recent financial crisis marked by mortgage defaults, high rates of unemployment, corporate scandals and overall lack of investor confidence, there has been a growing debate on the need to improve transparency, accountability, trust and credibility…
Author : allene12
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Does the rotation of auditors improve the quality of auditing?"
with a personal 20% discount.
Grab the best paper

Related Essays

Does the rotation of auditors improve the quality of auditing?
Further, it is expected that the mandatory auditor rotation will result in higher audit quality, results in auditor’s independence, a downturn in audit costs and to lessen big audit firms market concentration. It is to be noted, in the recent past, Italy, India and Brazil have made the auditor rotation as mandatory whereas Canada and Spain have revoked their earlier decision, whether to make auditor rotation as mandatory.
8 pages (2000 words) Essay
Auditing
It is also used by the investors in their decision making process, related to purchase or sell of the securities. The auditors guide the investors and owners in their decision making process. The effective utilization of financial statements requires understanding of the functions of auditors as well.
7 pages (1750 words) Essay
Does the rotation of auditors improve the quality of auditing?
There are those that argue that long-term relationships (auditor tenure) build more knowledge about the firm and its accounting procedures which, in turn, translates into more effective auditing practice and skills. Other stakeholders in the business world believe that audit quality is reduced when rotating auditors due to the lack of familiarity about business processes and accounting, thus impacting the ability of auditors to do a thorough job in assessing best practice within the organisation.
8 pages (2000 words) Essay
Does the rotation of auditors improve the quality of auditing?
In this context, the Sarbanes-Oxley act was implemented in the US that aimed at bringing back public faith in financial reports. The Sarbanes-Oxley Act made it mandatory for the auditor to be replaced after every five years in the US. The European Commission, however, did not mandate a compulsory auditor rotation, and recommended in its proposal implementation of audit firm rotation and change of audit firms every six to nine years (European Commission, 2010).2 Globally, mixed approaches have been adopted as regard MAR, and in many countries such as the UK, audit partner rotation is given preference over firm rotation, while the regulators in Germany, the US and the UK have derived that pote
7 pages (1750 words) Essay
Does the rotation of auditors improve the quality of auditing?
In general, auditing is fundamentally described as the systematic evaluation and the authentication of financial along with accounting records of a specific business organisation (Rathore, 2008; University of Mumbai, n.d.). It can thus be affirmed from a broader perspective that the auditing ensures the financial reports and the business finances of a specific organisation are appropriately reported and most vitally, effectively utilised (BMQR.org, 2011; Kumara & Sharma, 2011).
8 pages (2000 words) Essay
Does the rotation of auditors improve the quality of auditing?
It has also challenged numerous businesses, in the event of economic crisis by translating into high systemic risks and financial instabilities. Over the past, numerous corporations collapsed because they worked on wrong assumptions that failed to fully reflect the condition of their finances.
8 pages (2000 words) Essay
Does the rotation of auditors improve the quality of auditing?
This provision principally attempts towards ensuring that auditors are provided with better independence in their auditing operations as well as towards assuring that investors are offered with better confidence on the financial reports published following the auditing process.
8 pages (2000 words) Essay
Explain the cost, equity, proportionate consolidation and acquisition/consolidation methods and when we should use them.
It includes retained profits and losses and also, equity represents the ownership in the company (Lewis 2008). This method is used when a particular company purchases the stock of another company. Thus
1 pages (250 words) Essay
Partnership taxation
All Assets basis 90,000 dollars and it shows the contributed assets in the partnerships ownership. This is inside basis of ABC partnerships. All Assets Value add up to 115,000 dollars and this signifies partnership assets book
1 pages (250 words) Assignment
Find out how much would it cost
to get a custom paper written by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT