Auditor rotation: is it time?

FOR boards and their audit committees, the question "Is it time to change our external audit firm?" seems to be an evergreen conundrum.

The question could be prompted by the circumstances of the company or simply heightened awareness by one or more board members of the heavy discussion in the industry and internationally on the subject of mandatory auditor rotation.

The pros and cons of the subject are fairly well known. How a board arrives at a decision on the rotation of auditors depends on how the directors collectively weigh each of the factors.

For rotation

Proponents of rotation believe that it enhances the independence and effectiveness of the external audit.

Rotation, it is argued, helps to avert audit firms from having an excessive focus on maintaining a long- term commercial relationship with the client. Such a relationship could cause the audit firm to be - whether in fact or in perception - too familiar with, or committ…