Will mandatory audit-firm rotation prove effective in Ireland?

In order to enhance the independence of auditors, a new European directive governing the mandatory rotation of auditors will become binding in Ireland on the 16th of April 2016. The purpose of the regulations is to improve audit quality by removing any natural danger to the independence of auditors (Council Regulation No 537/2014 EU). There are two main types of auditor rotation: mandatory audit-firm rotation as was introduced in Spain, and mandatory audit-partner rotation as is practiced in the US, Australia and in other countries. This study will compare the experiences of mandatory rotation in those countries in order to provide an indication as to whether the rotation of auditors will prove effective in Ireland. The research will also explore the different components that impact on auditor independence such as: audit tenure, auditor-client closeness, client-specific knowledge, the provision of non-audit fees, and low-balling. Using these components as a proxy for independence, the study will seek to assess the effects of mandatory rotation on auditor independence. To gauge the attitude of accountants in Ireland and in countries where mandatory auditor rotation was introduced, an online questionnaire was distributed to a sample of 192 accountants. A nonparametric One-Sample Wilcoxon Signed Rank Test was used to analyse the data and the results indicate that the accountants neither agreed nor disagreed with the view that mandatory audit-firm rotation improves audit quality. However, they agreed with the statement that mandatory audit-partner rotation improves audit quality and they also agreed with the statement that client-specific knowledge is lost as a result of audit-firm rotation