Auditor appointment, rotation and independence: Some evidence from Malaysia

The aim of this paper is to examine the impact to auditor independence if the mandate to appoint auditor to regulatory body and exist auditor rotation scheme. This study sampled Malaysian auditors, loan officers and senior managers of public listed companies, and questionnaire and interview surveys were used to seek the respondent's perceptions. The majority of the respondents indicated that allocation of audit clients by a regulatory authority would threaten auditor independence. On the other hand, it is found that the majority of the loan officers and senior managers of public listed companies indicated that rotation of audit firms for a specified period of time would safeguard auditor independence, while the majority of auditors disagreed with both of these respondent groups and indicated that such an initiative would threaten independence. However, the respondents in all groups agreed that rotation of audit partners would safeguard auditor independence. This might suggest that the type of rotation is not the main concern to the loan officers and senior managers of public listed companies. The significant shift in auditors' perceptions, from rejecting the rotation of audit firms to accepting the rotation of audit partners indicates their preference of the rotation of audit partners scheme