|
|
|
|
||||
|
||||
Mandatory Audit Firm Rotation and Audit QualityAndrew B. JacksonUniversity of New South Wales (UNSW) - School of Accounting Michael MoldrichIndependent Peter RoebuckUniversity of New South Wales (UNSW) - School of Accounting July 12, 2007 Managerial Auditing Journal, Vol. 23, No. 5, 2008 Abstract: This study investigates the effect a regime of mandatory audit firm rotation would have on audit quality in an Australian setting. Using two measures of audit quality, being the propensity to issue a going-concern report and the level of discretionary accruals, the study examines the switching patterns of clients in their current voluntary switching capacity, and the levels of audit quality. We find that audit quality increases with audit firm tenure, when proxied by the propensity to issue a going concern opinion, and is unaffected when proxied by the level of discretionary accruals. We conclude that given the additional costs associated with switching auditors there are minimal, if any, benefits of mandatory audit firm rotation. Other initiatives to address concerns about auditor independence and audit quality therefore need be considered before imposing mandatory audit firm rotation.
Number of Pages in PDF File: 28 Keywords: Audit Quality, Audit Firm Rotation, Audit Opinion, Discretionary Accruals JEL Classification: M49, M47 working papers seriesDate posted: July 12, 2007 ; Last revised: January 4, 2010Suggested CitationContact Information
|
|
|||||||||||||||||||||||||||||||
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
FAQ
Terms of Use
Privacy Policy
Copyright
This page was processed by apollo1 in 0.546 seconds
