Audit Firm Rotation: What Is Auditing?

What is auditing? “Auditing is a systematic process of obtaining and evaluating the evidence regarding assertions." "Auditing is about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and communicating the results to interested users” (Messier, William, Steven Glover, and Douglas Prawitt). According to federal laws, public companies are required and responsible for the preparation of financial statements that are accurate and meet the standards of the accepted accounting principles. Once financial statements were processed over to a public accountant, they start the auditing process. The management’s responsibility is to review the creditors, stockholders and the accuracy …show more content…
Lately, the General accountancy office has been concerned about the long-term relationship with clients who are affected by the independence of their accounting firm’s financial statements. Studies conducted by General Accounting Office found that most public accounting firms and publicly traded companies say that the costs of an audit rotation are likely to exceed. Although an audit rotation may not be the best way to strengthen independence or quality of auditing because of the additional financial costs and losing previous records. Another effect mandatory rotation can cause it the audit assignment staffing. “The General Accounting Office researched that in response to their survey questions it stated that about fifty-nine percent of firms indicated that they would likely move their most knowledgeable and experienced audit staff to other work to enhance the firm’s ability to attract or retain other clients. Thirteen percent said it was unlikely to change staff” (The United States. General Accounting …show more content…
This is because when they have worked and known the auditor for a good duration of time, it’s comforting to them knowing that they are familiar with the company and the financial records of previous years and present. Although the debate is whether it is good to retain the same auditor for a long time or to change auditors every seven to ten years sometimes after twenty-four year years. Now maybe changing the auditors after twenty-four years is best, but only because most auditors are more experienced than others and gain up to date knowledge that a regular may not know. A survey was conducted based on changing accounting firms is a concern with companies with at least twenty-two years of experience. They feel that the change can result in an increase of risk of an audit failure. In my point of view, I feel that companies should change their auditor, but after ten years an auditor should rotate. It’s important to keep up with new information and technology, and if the financial statements are involved, I wouldn’t want to risk the