Conflicts of Interest and the Big Four: Towards a Mandatory Complete Auditor Rotation


Volume 11, Issue 1
Doha Harrag, Issam El Filali

Published online: 20 August 2025
Article Views: 20
 
AbstractReferencesCite
This article examines the impact of complete auditor rotation within audit firms on the quality of audit engagements and the management of conflicts of interest. The findings demonstrate that rotation significantly enhances auditor independence by fostering fresh perspectives and mitigating the risk of compromise due to excessive familiarity with clients. This practice strengthens professional vigilance and reinforces the perceived objectivity of the audit process. However, it also poses substantial operational challenges, including discontinuities in engagement monitoring, extended adaptation periods to new environments, and temporary productivity declines. Furthermore, the transition costs comprising training and the onboarding of new auditors represent a considerable burden for firms. The findings indicate a general consensus around an optimal rotation period of two to three years, balancing renewal with continuity. The study also underscores the importance of effective internal management of audit assignments, accounting for skill sets and sector-specific expertise, to maximize the benefits of rotation while minimizing its drawbacks.

  1. Agoglia, R. C. H., & Brazelc, J. F. (2009). The effect of audit review format on review team judgments. Auditing A Journal of Practice & Theory, 28(1), 15-21.
  2. Almutairi, A. R., Dunn, K. A., & Skantz, T. (2009). Auditor tenure, auditor specialization, and information asymmetry. Managerial Auditing Journal, 24(7), 600-623.
  3. AOUINA, M., et al. (2019). Le rôle de l’audit externe dans la transparence de la communication financière. une revue de littérature. Revue du contrôle, de la comptabilité et de l’audit, 3(1).
  4. Arel, B., Brody, R. G., & Pany, K. (2005). Audit firm rotation and audit quality. The CPA Journal, 75(1), 36.
  5. Cameron, J., Pierce, W. D., Banko, K. M., & Gear, A. (2005). Achievement-based rewards and intrinsic motivation: A test of cognitive mediators. Journal of educational psychology, 97(4), 641.
  6. Carcello, J. V., & Nagy, A. L. (2004). Audit firm tenure and fraudulent financial reporting. Auditing: a journal of practice & theory, 23(2), 55-69.
  7. Carcello, J. V., & Neal, T. L. (2000). Audit committee composition and auditor reporting. The accounting review, 75(4), 453-467.
  8. DeBoskey, D. G., & Jiang, W. (2012). Earnings management and auditor specialization in the post-sox era: An examination of the banking industry. Journal of Banking & Finance, 36(2), 613-623.
  9. De vue avec le Gouverneur, E. (2014). Tax, audit & accountancy.
  10. Dopuch, N., King, R. R., & Schwartz, R. (2001). An experimental investigation of retention and rotation requirements. Journal of Accounting Research, 39(1), 93-117.
  11. Ewelt-Knauer, C., Gold, A., & Pott, C. (2013). Mandatory audit firm rotation: A review of stakeholder perspectives and prior research. Accounting in Europe, 10(1), 27-41.
  12. Gates, J., Mahaffey, J. P., Rogers, S. L., Emerson, M., Rogers, E. M., Sottile, S. L., . . . Peifer, M. (2007). Enabled plays key roles in embryonic epithelial morphogenesis in drosophila.
  13. George, N. (2004). Auditor rotation and the quality of audits. CPA Journal, 74(12).
  14. Ghosh, A., & Moon, D. (2005). Auditor tenure and perceptions of audit quality. The accounting review, 80(2), 585-612.
  15. Horton, J., Livne, G., & Pettinicchio, A. (2021). Empirical evidence on audit quality under a dual mandatory auditor rotation rule. European Accounting Review, 30(1), 1-29.
  16. Lennox, C. S., Wu, X., & Zhang, T. (2014). Does mandatory rotation of audit partners improve audit quality? The accounting review, 89(5), 1775-1803.
  17. Margolis, R. H., Frisina, R., & Walton, J. P. (2011). Amtas R : Automated method for testing auditory sensitivity: Ii. air conduction audiograms in children and adults. International Journal of Audiology, 50(7), 434-439.
  18. Moody, J., Ojo, O. O., Omotade, O., Adeyemo, A., Olumese, P., & Ogundipe, O. (2003). Anti-sickling potential of a nigerian herbal formula (ajawaron hf) and the major plant component (cissus populnea l. cpk). Phytotherapy Research: An International Journal Devoted to Pharmacological and Toxicological Evaluation of Natural Product Derivatives, 17(10), 1173-1176.
  19. Said, K. M., & Khasharmeh, H. A. (2014). Mandatory audit firm rotation and audit costs: A survey of auditing firms in bahrain. Journal of Finance and Accounting, 2(6), 116-128.
  20. Vanstraelen, A. (2000). Impact of renewable long-term audit mandates on audit quality. European Accounting Review, 9(3), 419-442.
  21. Walker, P. L., Shenkir, W. G., Barton, T. L., et al. (2002). Enterprise risk management: pulling it all together. (No Title).
  22. Wamba, L. D., & Tagne, A. G. F. (2014). Le comportement des audités: quel effet sur la qualité de service rendu par les cabinets d’audit au cameroun? La revue gestion et organisation, 2(6), 93-103.
Harrag, D. & Filali, I. (2025). Conflicts of Interest and the Big Four: Towards a Mandatory Complete Auditor Rotation. International Journal of Business and Administrative Studies, 11(1), 12-20. https://dx.doi.org/10.20469/ijbas.11.10002-1