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Does the rotation of auditors improve the quality of auditing?
Finance & Accounting
Pages 7 (1757 words)
Does the rotation of auditors improve the quality of auditing? Introduction Mandatory audit firm rotation (MAR) has been a topic for debate for many years among practitioners and academic experts.1 With the current economic crisis and audit reporting failures, such as, Parmalat and Enron, this issue has gained further significance, and has resulted in many governments imposing various modifications in accountability, on both auditors and financial reports, aimed at curtailing chances of fraud.
ntial advantages of MAR fail to outweigh costs incurred and other associated risks. 3 In this context, the essay will review the available literature that analyses whether rotation of auditors improve quality of auditing. It will use deductive reasoning to derive that while there are not much empirical data that prove MAR significantly improves audit quality, at the same time, there is not much conclusive evidence that shows MAR has an adverse effect on audit quality, thus keeping the debate open. Discussion Audit, audit quality and auditor rotation In the UK, it is mandatory for all public sector organisations and large business firms to produce an annual, audited financial report. ...
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