Does the rotation of auditors improve the quality of auditing Essay - 2

Does the rotation of auditors amend the quality of auditing - Essay ExampleBased on all conjecture about such rotations and explore studies on auditing tenure versus rotation, it would appear that the quality of auditing is actually improved by rotating auditing firms. The evidence Pozen (2012) argues that when an organisation decides to roll auditors, in that respect is the need for significant investment on behalf of the unused auditing firm to gain important institutional knowledge about the industry which has already been shapeed by the incumbent auditing firm. Research studies have illustrated that there is reduced quality in auditing practice and competency during the initial years of appointment as the new auditing firm attempts to familiarise itself with specific business practices (Pozen 2012). Especially apparent in multi-national firms, new auditing companies must learn highly extensive information about corporate finance and accounting in a complex, international a ccounting environment. This requires time and perhaps even training, however once this information is gleaned, the auditor can bring home the bacon better quality audits even though this quality took considerable time to develop and enhance. The International fusion of Accountants sees the situation from a rather different perspective outside of the time and labour investment in learning business processes. Elongated and long-standing alliances with exist auditing firms are recognised as becoming too cozy with their corporate employers which changes the dynamics of how incumbent auditing firms view business practices and ideologies. When long-standing relationships are developed with existing auditing firms, auditors tend to wee favourable opinions, rather than unbiased opinions, about the corporate-mandated auditing processes. Existing auditor relationships that have endured oer time leads to trust-building in the midst of business and auditor which, in turn, creates a situat ion where the auditor handles investigations carelessly and are more involuntary to accept business written domainments rather than inspect the situation to ensure that the business is actually playacting compliance-based activities to general accounting standards (IFA 2010). Boxer (2008) absolutely agrees with the aforementioned notion of corporate cosiness developed over time and in the face of trust that endures through familiarity with business leaders. This author representing the Office of the Comptroller of the state of New Jersey refers to this scenario as familiarity fatigue stating that such familiarity with management leaders of the business leads to a inadequacy of independence where professional ties create a complicity that reduces auditing effectiveness and lack of unbiased auditing support (Boxer 2008). When this type of relationship is developed, the auditor loses their scepticism about the oral and written information that is provided to the auditor by the comp any leadership and, therefore, begins to overlook important facts and figures associated with financial statement production during the auditing processes. Boxer (2008) indicates yet another scenario that occurs, potentially, when maintaining enduring relationships with existing auditing firms. Auditors will have the tendency to desire corporate approval in the hopes of maintaining a continuous tax income