An in-depth study by the Brussels-based European accountancy body, FEE, which looked at reports on the topic by governments, regulators and academics from around the world, concluded that mandatory rotation ‘could undermine the EU’s work to build public trust in financial reporting’.
The research also found that mandatory rotation would lead to increased costs to business and time dedicated to oversee the process. Although FEE said cost should not be a decisive argument in decision making.
Proposals to introduce audit firm rotation were pushed up the agenda following the spate of corporate collapses in the US.
Following research the US concluded that rotation was not the solution in fighting high level fraud and corruption. Italy is the only EU country that applies mandatory rotation of audit firms.
Simon Wright of CareersinAudit.com discusses how an effective cyber defence force is critical to businesses worldwide and how internal auditors can make the transition to a new career in cyber security
The FRC has said that the investigation will 'consider, but not be restricted to, issues regarding misstated accounting balances'
Craig Maxwell joins the audit and assurance team in Scotland
Stephen Grayson to join the audit department in Manchester