Isn’t auditor rotation a matter of common sense?

Having never been an auditor, I must confess upfront that I don’t have the slightest idea of the ins and outs of conducting an audit. I can imagine, however, that it does involve significant cost and effort on the part of the both the auditor and the company when an audit changes hands.

From the auditor’s point of view, there is an awful lot to get your head around. From the company’s point of view, it’s a bit like a new joiner coming into your department – except there are loads of them all at once – eager, bright people buzzing around the office, poking into your affairs – and, scarily, they wield a certain power over you because you don’t always know what they will uncover and they are the ones who are responsible for assuring the outside world that your finances are just as you say they are. On that basis, you can’t blame most parties for being rather happy with the status quo at present.

Recently I researched an article on mandatory auditor rotation and a theme that frequently came up was ‘there’s no proof of quality’. Well, of course there’s no proof of quality. Few countries have followed auditor rotation policies for any length of time with the exception of Italy so the amount of research done on the topic is limited. But we are all familiar with the adage ‘familiarity breeds contempt’. Many of us will also know the management concept that what you do in the first 90 days in a new job is vital since it gives you the opportunity to make important changes. I certainly know from my own experience that when I’ve started a new job or joined a committee, the benefits that I brought when I came in with a fresh pair of eyes were considerable. As time goes on, it is easier for us to become complacent – in fact, I would say that it is almost inevitable that we will become complacent to some extent.

That’s why I believe that despite the cost and hassle involved, there must be sound benefits to mandatory auditor rotation. It seems common sense to me that changing auditors regularly should keep companies on their toes. I would be very interested to hear from experienced auditors about what they tend to discover when they take on new audits – typically, is everything as it should be or do some nasty surprises crop up? I’m not saying that auditors don’t do a good job now; I’m just saying that mandatory auditor rotation might enable them to do an even better job in future.


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