In short
Securities and Exchange Commission rules require the lead and concurring partners on a public company audit to rotate off after 5 years and stay off for 5 years.
Key takeaways
- Other audit partners rotate after 7 years with a 2-year time-out.
- It reduces the familiarity threat from long relationships.
- Mandatory audit firm rotation isn't required in the United States.
Where it's tested
AUD: Professional Ethics & Independence — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
An audit senior on the engagement team owns 10 shares of the audit client's common stock, worth approximately $300. What is the effect on independence?