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Auditor rotation: Are we going round in circles?

Paul Hodgson | October 26, 2016

Auditor rotation is the practice of mandatory changes in auditors to keep a fresh set of eyes on accounts and to prevent overfamiliarity that could lead to misstatements and misrepresentation in financial accounts.

As a practice, it goes in and out of fashion. Around the world, South Korea, Argentina, and Brazil have each implemented and discontinued the policy for certain sectors. EU-wide auditor rotation rules came into force on 17 June this year, based on an EU directive that was originally published in May 2014. These have already been introduced in the United Kingdom, but some member states (such as Spain and Italy) had previously implemented and discontinued the policy. Back in 2013, the U.S. House of Representatives voted overwhelmingly to prohibit the Public Company Accounting Oversight Board from requiring mandatory audit firm rotation. Then, in a single week in early October, the...

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