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

Author

Listed:
  • Diana Mostafa

    (Faculty of Management Technology, The German University in Cairo)

  • Magda Hussien

    (Faculty of Commerce, Ain Shams University, Cairo)

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.

Suggested Citation

  • Diana Mostafa & Magda Hussien, 2010. "The Impact of Auditor Rotation on the Audit Quality: A Field Study from Egypt," Working Papers 23, The German University in Cairo, Faculty of Management Technology.
    • Handle: RePEc:guc:wpaper:23
    as

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    File URL: http://mgt.guc.edu.eg/wpapers/023mostafa_habib2010.pdf
    File Function: First version, 2010
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    More about this item

    Keywords

    Audit Quality; Auditor Rotation; Auditor Independence; Egypt;
    All these keywords.

    JEL classification:

    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General

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