Work

Audit Firm Rotation, Auditor Specialization, and Audit Quality in the Municipal Audit Context

Year: 2015

Type: article

Abstract: ABSTRACT The topic of audit firm rotation has been debated internationally for several decades. To inform the debate, we study the effects of audit firm rotation policies on audit quality in a government audit market. Using audit firm rotation data and audit quality measures from the Florida government audit market, a setting where procurement policies vary, we find that rotation policies are indirectly associated with higher audit quality. In particular, mediation analysis suggests that the consequences of policies that encourage Florida municipalities to consider rotation impact audit quality by encouraging the use of auditors that specialize in governmental audits, rather than auditor independence, which is frequently argued to support mandatory rotation.

Source: Journal of Governmental & Nonprofit Accounting

DOI: 10.2308/ogna-51188

Authors: Randal J. Elder, Suzanne Lowensohn, Jacqueline L. Reck

Institutions: University of South Florida, Syracuse University, Colorado State University

Language: English

Topic: Auditing, Earnings Management, Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Peace, justice, and strong institutions

Open Access status: diamond

OpenAlex ID: W2148900618