Audit rotation refers to a regulatory or policy requirement that mandates the periodic changing of an audit firm or auditor for a company to maintain the audits' objectivity and independence.
Audit rotation is the policy of appointing an audit firm for a set period only, after which a different firm must be employed. This practice aims to prevent the renewal of audits from influencing conduct and ensure auditor independence. However, it faces criticism for cost implications, disruption, and potentially reduced audit quality.
The foundational element ensuring that auditors maintain their integrity and provide objective professional and business judgments in their work. Specific threats to this independence are extensive and regulated by both legislation and professional bodies.
An alleged practice where auditors reduce their fees for statutory audits to attract clients, intending to compensate through highly profitable non-audit services.
Additional services provided by audit firms to their clients beyond the traditional audit engagement, such as tax advice and consultancy. Debate exists regarding the impact of these services on auditor independence.
Opinion shopping refers to the practice of a company seeking out an auditor who is willing to approve its financial statements without qualifications, even when they do not meet generally accepted accounting principles.
