Question

1. In the Accounting profession, partners must be rotated regularly to ensure that proper oversight is maintained and that a company and its auditors do not become "too cozy" The FAA has no such rule regarding its officials. Do you think that they should? What issues are caused or solved by leaving things the same or adopting a "regular rotation" protocol?

Answer 1

answer-

I think should not be implemented because Auditor rotation might sound like a simple and desirable concept, but dig a little and it is much more complicated than you might imagine

The new auditor may ask for different schedules to be prepared or request other types of documentation than staff is used to, or other differences. This can increase the number of hours staff spend preparing for the audit and take their time and attention away from other important projects.

There is also the process of helping the new auditor to understand internal control systems, assess risk, etc. and know who to ask all of the various questions that need to be answered during the engagement.

The new auditor also may not fully understand all the personality and internal political dynamics of the new client – that develops over time in a continuing engagement.

From the Council or Board level, a new auditor may have a different style of presenting audit results or different philosophies about what constitutes an audit finding and what does not.

In specialized industries such as governments or non-profits, there may be a limited number of firms in your local area that have the expertise needed, which increases the risk of engaging a firm that is not qualified to do the audit or require the organization to pay higher fees because certain firms can’t bid or certain bids can’t be accepted.

the issues not implementing this would be-

If an audit firm is familiar with an organization, it knows what reports to ask for and where to get them. It also learns the company’s terminology, which streamlines the audit process. Auditors can be more effective after they’ve gone through a couple of audit cycles because they have institutional knowledge.

Although switching to another firm may cost less upfront, in the long run, you might experience the indirect cost of your time — or, more specifically, the extra time you’ll have to spend training the new firm and familiarizing them with your operations. Or, it’s possible that the final bill is higher than anticipated because the auditor had to undertake additional work, like bookkeeping. There’s also a cost to a deficient audit. If the auditor missed something, such as an organizational weakness that encourages fraud, the company ends up paying more late