The effect of audit partner rotation on audit quality

3Citations
Citations of this article
35Readers
Mendeley users who have this article in their library.

Abstract

Background: The new Spanish Audit Law (2015) includes stricter safeguards related to mandatory audit partner and audit firm rotation than the former Law (2010). These safeguards imply a high cost for the market, but evidence about their convenience for accounting information users is not conclusive. Objective: To provide evidence about the effect of mandatory audit partner and audit firm rotation on audit quality. Specifically, this report analyzes if audit partner rotation has a positive influence on audit quality by itself or it must be strengthened by audit firm rotation. Method and sample: This study focuses on the observable audit partner and audit firm changes in the Spanish market. The sample consists of the big companies with financial distress symptoms. The issuance of a going concern uncertainty acts as a proxy of audit quality. We analyze if financially distressed companies which changed their audit partner or audit firm have a higher probability to receive a going concern qualification. Results: The results show that audit partner rotation doesn't affect audit quality. Moreover, audit firm rotation by itself or together with audit partner rotation doesn't influence audit quality. Conclusions: High cost safeguard measures have been imposed on the market but they have not demonstrated to be any effect on audit quality.

Cite

CITATION STYLE

APA

Gómez Aguilar, N., Biedma López, E., & Ruiz Barbadillo, E. (2018). The effect of audit partner rotation on audit quality. Revista de Contabilidad-Spanish Accounting Review, 21(1), 7–18. https://doi.org/10.1016/j.rcsar.2017.03.001

Register to see more suggestions

Mendeley helps you to discover research relevant for your work.

Already have an account?

Save time finding and organizing research with Mendeley

Sign up for free