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Mandatory audit firm rotation in Spain: a policy that was never applied

Author

Listed:
  • Nieves Carrera
  • Nieves Gómez‐Aguilar
  • Christopher Humphrey
  • Emiliano Ruiz‐Barbadillo

Abstract

Purpose - In recent international debates on auditing regulation, Spain has assumed a real prominence as a claimed practical example of where a policy of mandatory audit firm rotation did not work and was duly abolished. This study aims to provide an analysis of the implementation and subsequent removal of mandatory audit firm rotation in Spain in the 1990s. Design/methodology/approach - This takes the form of historical analysis; the evidence in the paper derives from congressional hearings, financial newspapers and documents produced by the professional associations of auditors in Spain. Findings - This paper demonstrates that at no stage was mandatory rotation of audit firms ever enforced on Spanish auditors. Further, the revision and subsequent removal of the Spanish law on mandatory audit firm rotation emerge as a rather politicized process, with no evident reference being made in the process of legislative reform to Spanish auditing experiences. The analysis also reveals that at the very time that Spain was being cited internationally for rejecting mandatory audit firm rotation, Spanish political parties and regulators were debating whether to “re‐introduce” such a regulation. Originality/value - The clear implication of the paper is that considerable caution needs to be taken in today's international‐auditing arena, when analyzing the standpoints and claims made by professional associations and the evidence they provide to support their arguments for and against regulatory reform.

Suggested Citation

  • Nieves Carrera & Nieves Gómez‐Aguilar & Christopher Humphrey & Emiliano Ruiz‐Barbadillo, 2007. "Mandatory audit firm rotation in Spain: a policy that was never applied," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 20(5), pages 671-701, September.
    • Handle: RePEc:eme:aaajpp:v:20:y:2007:i:5:p:671-701
    DOI: 10.1108/09513570710779009
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    References listed on IDEAS

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    Cited by:

    1. Beatriz García Osma & Belén Gill de Albornoz Noguer & Elena De las Heras Cristobal, 2016. "Opinion shopping: Partner versus firm-level evidence," Working Papers. Serie EC 2016-02, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    2. C. Okaro Sunday & Gloria O. Okafor & Grace N. Ofoegbu, 2018. "Mandating Joint Audits in Nigeria: Perspectives and Issues," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 8(3), pages 316-338, March.
    3. Isabel Olmedo-Cifuentes & Inocencia Martínez-León & Gary Davies, 2014. "Managing internal stakeholders’ views of corporate reputation," Service Business, Springer;Pan-Pacific Business Association, vol. 8(1), pages 83-111, March.
    4. Indyk Magdalena, 2019. "Mandatory audit rotation and audit market concentration—evidence from Poland," Economics and Business Review, Sciendo, vol. 5(4), pages 90-111, December.

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    Keywords

    Auditing; Regulation; Spain;
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