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In case of listed entities, the length of duration that an audit firm or partners can provide for the assurance service and the cooling period issue.
In Kaplan book at the safeguard measure against long association of senior personnel, it has been written that key audit partners must be rotated after no more than seven years with minimum break of two years.
Again on supplementary reading, it has mentioned if the engagement partner has been in place for seven consecutive years, cooling period is five consecutive years.
Does this means that an audit firm can, provide services in case of listed company, for seven years, and during this period if the firm wishes rotate the partners within the same seven year frame, with same partners not being assigned for two years after rotation ?
Also, Is it also mandatory for audit firms to rotate partners during this 7 years or can a single partner can be engagement partner for entire 7 years ?
The cooling off period used to be 2 years but was increased to 5 years for the key audit partner when the “long-association” section of the IESBA Code (also ACCA Code) was revised in 2018.
I don’t really understand your question – firms do not want to rotate audit partners – hence the need for requirement. So a firm would not choose to rotate an audit partner within 7 years – but on completion of the 7 years.
If after 5 years and audit partner had to miss a year – e.g. because of illness – that would not be rotation. The 1 year would neither be cooling off nor contribute to the 7 years. So after returning from a leave of absence of 1 year the partner could be the key audit partner for a further 2 years.