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The Effects of Mandatory Audit Firm Rotation on Audit Quality
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Business Studies.
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Business Studies.
2017 (English)Independent thesis Basic level (degree of Bachelor), 10 credits / 15 HE creditsStudent thesis
Abstract [en]

In 2014, the new statutory audit framework proposed by EU was adopted and eventually implemented in Sweden in 2016. The framework included a mandatory audit firm rotation every ten years for public interest entities, with the main objective of enhancing auditor independence. The aim of this study is to examine how mandatory audit firm rotation could affect audit quality. The study is based on a qualitative research method in which auditors were interviewed in order to understand how they perceive the effects of the regulation on the determinants behind audit quality. The study indicates that auditor independence in fact will not be affected by mandatory audit firm rotation, while the perceived independence by the public, i.e. auditor independence in appearance, will be enhanced. The study further suggests that the potential loss of client-specific understanding and knowledge due to shorter audit firm tenures may lead to negative effects on audit quality.

Abstract [sv]

År 2014 antogs det föreslagna revisionspaketet av EU vilket implementerades i Sverige i juni 2016. Paketet inkluderade bland annat en obligatorisk byrårotation var tionde år för bolag av allmänt intresse, med primärt mål att stärka revisorns oberoende. Syftet med denna studie är att undersöka hur obligatorisk byrårotation kan påverka revisionskvalitet. Studien grundar sig på en kvalitativ undersökningsmetod där revisorer intervjuats för att förstå hur de uppfattar effekterna av obligatorisk byrårotation på faktorerna bakom revisionskvalitet. Studien indikerar att revisorns faktiska oberoende inte kommer att påverkas av obligatorisk byrårotation, medan det synbara oberoendet kommer att stärkas. Vidare indikerar studien att den potentiella förlusten av klientspecifik förståelse och kunskap till följd av kortare revisionsuppdrag kan leda till negativa effekter på revisionskvaliteten.

Place, publisher, year, edition, pages
2017. , p. 38
Keywords [en]
Mandatory audit firm rotation, mandatory rotation, auditor competence, auditor independence, audit quality
National Category
Business Administration
Identifiers
URN: urn:nbn:se:uu:diva-325494OAI: oai:DiVA.org:uu-325494DiVA, id: diva2:1114921
Subject / course
Business Studies
Educational program
Bachelor Programme in Business and Economics
Supervisors
Available from: 2017-06-26 Created: 2017-06-26 Last updated: 2017-06-26Bibliographically approved

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CiteExportLink to record
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Citation style
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