Close

Are you in compliance?

Don't miss out! Sign up today for our weekly newsletters and stay abreast of important GRC-related information and news.

×

Status message

Start your free, no obligation 5-day trial to continue exploring with full access.

Rotation May Hinder Audit Quality, Study Says

Tammy Whitehouse | July 21, 2015

A new academic paper suggests rotating auditors may not be such a good idea, especially as regulators are getting tough on auditors to show more skepticism and objectivity in their work.

The study appears in the latest issue of The Accounting Review, the research journal of the academic American Accounting Association. The authors say they used psychology theory and a lab experiment to show that the prevailing assumption about the benefits of rotating audit partners -- that it will encourage skepticism -- is off target. In fact, the study says, skepticism “disappears and even reverses when auditors rotate. That is, rotation and a skeptical mindset interact to the detriment of audit effort and financial reporting quality.”

Engagement partners are required to rotate audit...

Read this single article for $49, or click the subscribe button below to review subscription options.

Enjoy unlimited access to thousands of articles, browse five years of digital magazines, qualify for reduced admission to events, and more.