Mandatory external rotation of accountantsoffices Essay

Mandatory external rotation of accountantsoffices - examine ExampleIn the U.S., the Securities and Exchange Commission is responsible for spelling out audit requirements. The SEC is more focused on internal audit as compared to external mandatory rotation of audit firms. pecuniary accounting reporting and auditing have been the key areas affected by the European crisis. In an attempt to subside the predicament, both Europe and the U.S. have tried to come up with rotation. Rotation has been viewed as a theme to mitigate the threats associated with financial independence generated by developed nations (Mihaela et al., 2010). At a time when the world is set about a crisis new audit policy has to be a crucial factor in avoiding losses. Auditors normally find themselves in a fix due to the fact of universe familiar with the management and being intimidated by their lymph nodes, which adversely leads to long-term client-audit relationship. Over the recent old age, the subject of long-term audit and client relationship has raised eyebrows within public and social realms. Mandatory external rotation of accountants offices is believed to increase auditor independence and quality of audit and financial reporting (Velte & Stiglbauer, 2012). On the other hand, external auditing increases the cost of auditing in the first two years. This is because the risk of liability from auditors is significantly high in the first two years than within subsequent years. Due to the audit concentration of the four big companies, external mandatory rotation is almost not realized. The big four has a command on the number of companies they audit all(prenominal) year. In addition, the big four has vast experience in consultancy and have advisory services to testify to it. Therefore, this makes it hard for small and mid-sized accounting firms, which are looking forward to enter into a new grocery store (Velte & Stiglbauer, 2012). In other cases, there have been arguments on the quality of auditing in