Thursday, June 02, 2005

Douglas County Bank-Audit Rotation Misinformation2005-05-01

Douglas County Bank: "Audit Rotation Misinformation2005-05-01

While auditor rotation has been bandied about in the wake of the Sarbanes-Oxley Act, there is no requirement for public companies, government entities or nonprofits to change audit firms.
For publicly held companies, SOX Sec. 203 requires that audit partners must rotate off of the audit every five years, but the same audit firm can be used.
For government entities, a November 2003 GAO report found that '... mandatory audit firm rotation may not be the most efficient way to ... improve audit quality considering the ... loss of institutional knowledge of the public company's previous auditor of record.'
Access the report at d03419sp.pdf.
And a report from the Panel on the Nonprofit sector, convened at the request of the U.S. Senate Finance Committee in October 2004, does not recommend the rotation of auditors for charitable organizations.
Access the report at
Copyright California Society of Certified Public Accountants May 2005 "

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