Document Type

Honors Thesis


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.

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Creative Commons Attribution 4.0 International License
This work is licensed under a Creative Commons Attribution 4.0 International License.



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