Audit partner rotation questioned
Survey: audit committees want 7-year rotation period
Most audit committees in the UK would like to extend the five-year rotation
period for their lead audit partner.
The ICAEW surveyed 121 FTSE 350 audit committee chairs and found that 78.5%
of respondents wanted to hang onto lead audit partners for longer, or at least
have the flexibility to do so.
Just over half expressed interest in a seven-year rotation period, while 24%
opted to retain the five-year period but be able to extend it to seven if
required. 21.5% said they would maintain the five-year period.
Mandatory rotation rules were introduced in line with the Sarbanes-Oxley
legislation in the United States following the Enron scandal, which also bought
down the company’s auditors Arthur Andersen.
Regulators worried that if audit partners grew too close to clients over
time, it might cloud the auditors judgement if problems emerged.