Audit rotation and strength of corporate governance and its effects on audit quality

• Main Authors: Sulaiman, Noor Adwa, Jaffar, Nahariah, Yahya, Yazkhiruni
• Format: Article
• Published: Universiti Teknologi Mara 2022
• Subjects: Accounting. Bookkeeping
• Online Access: http://eprints.um.edu.my/43732/

This paper discusses the effects of audit rotation-audit partner rotation and audit firm rotation, and strengths of corporate governance on audit quality. A total of 130 audit practitioners participated in the experimental study. The results showed that audit firm rotation had a significant effect on audit quality while both audit partner rotation and strength of corporate governance had no significant effect on audit quality. Further, evidence showed absence of interaction effects between audit rotation and strength of corporate governance on audit quality. The findings suggest the importance of enhancing audit quality through the practice of rotating audit firms but not audit partner. This study provides additional recent evidence concerning the effects of audit partner rotation and audit firm rotation, and strengths of corporate governance on audit quality in the Malaysian setting. Thus, policy makers should revisit whether the current policy of audit firm rotation and effectiveness of corporate governance best practices is sufficient in ensuring high audit quality performance. © 2022, Universiti Teknologi Mara. All rights reserved.