MANDATORY ROTATION OF AUDIT FIRMS

On Apr 3, 2014, the European Parliament approved the new EU Audit Regulation and Directive, which will require European-listed companies, banks and financial institutions to appoint a new auditor every ten years. The subject of mandatory firm rotation (MFR), inter alia, was raised at a recent roundt...

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Bibliographic Details
Published inAccountancy SA p. 18
Format Trade Publication Article
LanguageEnglish
Published Johannesburg South African Institute of Chartered Accountants 01.10.2014
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ISSN0258-7254

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Summary:On Apr 3, 2014, the European Parliament approved the new EU Audit Regulation and Directive, which will require European-listed companies, banks and financial institutions to appoint a new auditor every ten years. The subject of mandatory firm rotation (MFR), inter alia, was raised at a recent roundtable discussion hosted by KPMG and economia, the member publication for the institute of Chartered Accountants in England and Wales, as part of a series of global discussions about the value of audit. The panel believed that South Africa already had in place a number of other mechanisms that addresses audit quality more appropriately than MFR. This includes the statutory requirement for shareholders to appoint members of the audit committee, who in turn have a statutory obligation to nominate for appointment an auditor, after having considered the auditor's independence. Regardless of the issue of rotation, the panel all agreed with Edson Magondo, Head of Audit, KPMG in South Africa, when he concluded that as an audit partner, a key determinant of quality was leadership.
ISSN:0258-7254