This study examines audit partner rotation practices prior and subsequent to the implementation of Professional Statement F1 on 31 December 2003. This study is motivated by concerns that the cost of implementing mandatory partner rotation would be disproportionately higher for small audit firms. As expected, where audit partner tenure was high, the change in partner rotation policy did have a significant effect on existing partner rotation practices. Despite voluntary rotation practices prior to Professional Statement F1, further reductions in long tenure occurred for Big 4 audit firms. There are however exceptions to Professional Statement F1 (2002), consistent with the need for ASIC relief provisions in CLERP 9. The results indicate a higher incidence of long signing partner tenure for small audit firms, supporting concerns that small audit firms incur higher costs in complying with mandatory rotation and have been adversely affected by the mandatory imposition of these requirements. The descriptive evidence suggests that auditors in locations outside Australia’s three major cities are likely to have longer audit partner tenure than those located in Brisbane, Melbourne, or Sydney; however this effect is not significant in the multivariate analysis.
|Number of pages||1|
|Journal||2007 AFAANZ conference : papers|
|Publication status||Published - 2007|
|Event||Accounting Association of Australia and New Zealand Conference (2007) - Gold Coast, Qld.|
Duration: 1 Jul 2007 → 3 Jul 2007
- mandatory audit partner rotation