The jury is still out on audit firm rotation, according to finance directors.
Amid demands for increased auditor independence and the compulsory rotation of audit firms every seven years, only a slim majority of FDs believe companies should not be forced to change auditors.
The inconclusive result is revealed in the latest Accountancy Age/Reed Accountancy Personnel Big Question.
Asked whether companies should be forced to rotate their audit firms, 54% disagree, while 38% say they should rotate. A further 8% were undecided. Arguing in favour of rotation, Anne Bowes of Peake Construction Consultants said: ‘As an ex-auditor, I have seen it from both sides and relationships do build, which can be too cosy. Independence is critical in keeping shareholders happy.’
Paul Taylor, Congregational and General’s FD, was firmly in the ‘no’ camp.
He said: ‘This would imply the auditors aren’t doing their job and maintaining standards and impartiality.’
The most frequently cited reasons for rotating auditors was the need to prevent auditors from becoming complacent and getting too close to their clients.
As David Edwards of Use Colour said: ‘Yes, it makes sense, otherwise lethargy sets in.’
Compulsory rotation of partners or firms undertaking audits was recommended by the DTI report into the Maxwell affair.