Auditors Rotation
Auditor Rotation | Raising Auditor 's Independence |
Proposed By: Varun Basantani |
Auditor Rotation- Raising Auditor 's Independence
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Abstract:
The question for mandatory audit rotation has been a concern to academics, investors, practitioners and the public at large. This paper is designed to determine the relationship between mandatory audit rotations and audit Independence.
The paper makes an earnest effort to evaluate the need for rotation of auditor.
It uses different studies done at various universities at allied subjects.
It compares such provision in various statute like “Insurance Regulatory and Development Authority”, “Banking Regulatory Act”, “Sarbanes-Oxley Act (SOx)” etc.
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I. Introduction
L ong awaited Companies Bill, 2012 got its assent in the Lok Sabha on December 18, 2012. In this regard, in a current draft of Companies Bill 2012, The Ministry of Corporate Affairs plans the mandatory audit firm rotation in case of listed companies (as may be prescribed), it would be mandatory to rotate auditors – every 5 years in case of the appointment of an individual as auditor and every 10 years in case of appointment of an audit firm with a uniform cooling off period of 5 years in both cases to increase auditor independence. The present paper gives a state of the art analysis of the empirical research done by various experts with regard to auditor and audit firm rotation. Some of us may consider this as a new aspect, However Sarbanes-Oxley Act commonly called as SOx places significant independence requirements on auditors, reinforced by related SEC and PCAOB rules and requirements. One of these is lead audit partner and engagement quality control review partner rotation, which requires the financial statements to be audited by a “fresh set of eyes” every five years.
Even in India, IRDA has a prescription
Proposed By: Varun Basantani |
Auditor Rotation- Raising Auditor 's Independence
-------------------------------------------------
Abstract:
The question for mandatory audit rotation has been a concern to academics, investors, practitioners and the public at large. This paper is designed to determine the relationship between mandatory audit rotations and audit Independence.
The paper makes an earnest effort to evaluate the need for rotation of auditor.
It uses different studies done at various universities at allied subjects.
It compares such provision in various statute like “Insurance Regulatory and Development Authority”, “Banking Regulatory Act”, “Sarbanes-Oxley Act (SOx)” etc.
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I. Introduction
L ong awaited Companies Bill, 2012 got its assent in the Lok Sabha on December 18, 2012. In this regard, in a current draft of Companies Bill 2012, The Ministry of Corporate Affairs plans the mandatory audit firm rotation in case of listed companies (as may be prescribed), it would be mandatory to rotate auditors – every 5 years in case of the appointment of an individual as auditor and every 10 years in case of appointment of an audit firm with a uniform cooling off period of 5 years in both cases to increase auditor independence. The present paper gives a state of the art analysis of the empirical research done by various experts with regard to auditor and audit firm rotation. Some of us may consider this as a new aspect, However Sarbanes-Oxley Act commonly called as SOx places significant independence requirements on auditors, reinforced by related SEC and PCAOB rules and requirements. One of these is lead audit partner and engagement quality control review partner rotation, which requires the financial statements to be audited by a “fresh set of eyes” every five years.
Even in India, IRDA has a prescription
References: * Adeyemie lio, S. B., & Okpala, O. (2011). * Arrunada B. and Paz-Ares C. (1997) * Cameran,M M., Prencipe, A * Healey T.J. & Kim Y.J. (2003).