20 October 2004

The FEE Study on Mandatory Rotation of Audit Firms

FEE has undertaken a study of the arguments and conclusions reached by governments, regulators, academics and professional bodies who have considered external rotation of audit firms. The survey sets out the main arguments made in these reports in favour of such rotation as well as against. The overwhelming majority of studies found that the mandatory rotation of audit firms inadvertently threatens audit quality.

Findings of this study include that the majority of studies found that the mandatory rotation of audit firms threatens audit quality and could in fact undermine public trust in financial reporting.

FEE does not support an additional requirement for mandatory rotation of audit firms as it has little incremental benefit for audit independence or increased competition but risks creating real threats to audit quality.

Cover note
Study

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