Document Type
Honors Thesis
Abstract
This paper analyzes the advantages and disadvantages of the implementation of mandatory audit firm rotation by companies publicly listed in the United States. Currently, the Sarbanes-Oxley Act (SOX) requires lead engagement partners auditing public companies to rotate off public company audit engagements after a period of five years, without returning for an additional five years. Further, SOX also required a mandatory study of the feasibility of mandatory audit firm rotation. Proponents contend that this might enhance independence while increasing objectivity and professional skepticism. The author’s findings suggest that these perceived advantages are greatly outweighed by the disadvantages that might result from implementation of such a policy. The disadvantages include possible higher audit fees and volatile pricing structures, loss of invaluable client knowledge bases, decrease in audit efficiency, more time devoted by audit partners to marketing matters as opposed to employing technical acumen, and a possible loss of audit committee power.
Publication Date
12-1-2015
Language
English
License
This work is licensed under a Creative Commons Attribution 4.0 International License.
Recommended Citation
Boutwell, David Austin, "AN EXAMINATION OF THE EFFECTIVENESS OF REQUIRED AUDIT FIRM ROTATION BY PUBLIC COMPANIES" (2015). 2015 Fall Honors Capstone Projects. 2.
https://mavmatrix.uta.edu/honors_fall2015/2