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Hi,
Looking at Goofy from (6/11) exams.
Bpp has it that “the ACCA code of ethics and conduct suggests seven (7) years for public and listed entities” While the examiners answer has five years.
was there a change in the last two years?
or is five correct?Not sure if this is an ammendment but this is what i found in the ACCA rule book
Audit clients that are public interest entities
290.151 In respect of an audit of a public interest entity, an individual shall not be a key
audit partner for more than seven years. After such time, the individual shall not
be a member of the engagement team or be a key audit partner for the client for
two years. During that period, the individual shall not participate in the audit of the
entity, provide quality control for the engagement, consult with the engagement
team or the client regarding technical or industry specific issues, transactions or
events or otherwise directly influence the outcome of the engagement.290.152 Despite paragraph 290.151, key audit partners whose continuity is especially
important to audit quality may, in rare cases due to unforeseen circumstances
outside the firm’s control, be permitted an additional year on the audit team as
long as the threat to independence can be eliminated or reduced to an acceptable
level by applying safeguards. For example, a key audit partner may remain on
the audit team for up to one additional year in circumstances where, due to
unforeseen events, a required rotation was not possible, as might be the case due
to serious illness of the intended engagement partner.290.153 The long association of other partners with an audit client that is a public interest
entity creates familiarity and self-interest threats. The significance of the threats will
depend on factors such as:Wow! Latoyah – do you want to take over this role of question answering?????
Actually, the Competition Commission in the UK is pushing for a five year rotation of audit firms – so all the above COULD become irrelevant. The FRC is fighting against the Competition Commission and insisting on a 10 year rotation.
Do you know that the average period of time that incumbent auditor firms have served their top 100 company clients in the UK is ….wait for it ….. 49 years, yes, forty-nine years.
I think we could probably all agree (with the exception of the audit firms involved) that it’s time we had stricter rules on audit rotation. And did you also know that 99 of the top 100 company clients in the UK are audited by just 4 audit firms? (I forget the names of those 4 audit firms but I’m sure you could guess them!)
Unfortunately, it is estimated that the introduction of 5 year rotation would increase audit fees by over £100,000,000 per year. And of course, the audit clients are going to sit back and say”So be it”? I think not! It’s the poor consumer that is going to be hit in the pocket as a direct consequence of the Commission’s recommendations, if implemented and even a 10 year rotation is going to hurt our “man in the street”
Discuss!
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