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The Impact of Auditor Rotation on the Audit Quality: A Field Study from Egypt

Diana Mostafa () and Magda Hussien
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Diana Mostafa: Faculty of Management Technology, The German University in Cairo
Magda Hussien: Faculty of Commerce, Ain Shams University, Cairo

No 23, Working Papers from The German University in Cairo, Faculty of Management Technology

Abstract: Lack of audit quality and subsequent audit failures result mainly from a lack of independence which is considered to be a consequence of the extended auditor client relationship. Actually, the results of a questionnaire distributed among auditors in Egypt confirm this hypothesis: The Auditors strongly agree that there is a lack of auditor independence in Egypt. The main reason is that most of the companies are closely held and that there is a lack of existence of code of ethics for auditing practitioners in Egypt. Also, the results indicate that the mostly accepted solution by the auditors to overcome the lack of independence problem is the mandatory auditor rotation. Consequently, the paper suggests that mandatory firm rotation instead of mandatory partner rotation should be applied in Egypt.

Keywords: Audit Quality; Auditor Rotation; Auditor Independence; Egypt (search for similar items in EconPapers)
JEL-codes: M40 M42 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2010-11
New Economics Papers: this item is included in nep-acc and nep-ara
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http://mgt.guc.edu.eg/wpapers/023mostafa_habib2010.pdf First version, 2010 (application/pdf)

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