scholarly journals Disciplining Role of Auditor Tenure and Mandatory Auditor Rotation

2021 ◽  
Author(s):  
Aysa Dordzhieva
Keyword(s):  
The United States ◽  
Auditor Independence ◽  
The European Union ◽  
International Debate ◽  
Auditor Tenure ◽  
Audit Firms ◽  
Client Relationship ◽  
Popular View ◽  
Mandatory Rotation

This study addresses the international debate over whether the rotation of audit firms should be mandatory. Mandatory rotation rules have been adopted by the European Union, but these rules have not been established in the United States. Proponents of the policy believe that a long-tenure auditor-client relationship leads to the auditor building an excessive economic bond with the client which may then erode auditor independence. Motivated by this claim, I build a theoretical model that compares auditor incentives to issue independent reports under regimes with and without mandatory rotation. The model demonstrates conditions under which mandatory rotation could actually impair auditor independence, contrary to the popular view.

Are There Adverse Consequences of Mandatory Auditor Rotation? Evidence from the Italian Experience

2013 ◽  
Vol 34 (1) ◽  
pp. 1-24 ◽  
Author(s):  
Mara Cameran ◽  
Jere R. Francis ◽  
Antonio Marra ◽  
Angela Pettinicchio
Keyword(s):  
Audit Quality ◽  
Earnings Quality ◽  
The United States ◽  
First Year ◽  
The European Union ◽  
Auditor Rotation ◽  
Italian Experience ◽  
Auditor Tenure ◽  
Mandatory Rotation

SUMMARY Mandatory auditor rotation was recently proposed for the European Union and is also under consideration in the United States. There has been little research into either the benefits or costs of rotation in a true mandatory setting that could inform intelligent policy making. Our paper helps fill this gap by examining Italy, where mandatory rotation of auditors has been required since 1975. We find that outgoing auditors do not shirk on effort (or quality), but final-year fees are 7 percent higher than normal, which may indicate opportunistic pricing. The fees of incoming auditors are discounted by 16 percent even though they have abnormally higher engagement hours in the first year (17 percent), which is suggestive of lowballing. However, subsequent fees are abnormally higher and exceed the initial fee discount. Thus, the costs of mandatory rotation are nontrivial. Higher costs could be acceptable if rotation improves audit quality, but we find evidence of the opposite. Namely, the quality of audited earnings is lower in the first three years following rotation, relative to later years of auditor tenure. Since rotation is costly and earnings quality improves with longer auditor tenure, the evidence from Italy does not support the case for mandatory rotation.

scholarly journals An Analysis of Mandatory Auditor Rotation Requirements in South Africa in light of International Legislative Trends

Obiter ◽  
2019 ◽  
Vol 40 (2) ◽  
Author(s):  
Vela Madlela
Keyword(s):  
South Africa ◽  
Financial Markets ◽  
Audit Quality ◽  
The United States ◽  
Auditor Independence ◽  
Company Law ◽  
The European Union ◽  
External Audit ◽  
Auditor Rotation ◽  
Mandatory Rotation

An independent and objective external audit of companies is an integral element of sound corporate governance and of functional financial markets. The issues relating to auditor independence and objectivity have attracted considerable regulatory and public scrutiny in many leading jurisdictions. This is partly due to a general decrease in audit quality over the years as evidenced by high-profile accounting scandals and audit failures, both locally and internationally, as well as the vital role that an external audit is expected to play in ensuring transparency, accuracy and efficiency in the financial markets. In an attempt to restore confidence in the audit profession and to strengthen the independence of the external audit function for companies, legislatures in some leading jurisdictions have introduced a variety of regulatory strategies, including mandatory rotation of auditors in the form of mandatory audit partner rotation (MAPR) and/or mandatory audit firm rotation (MAFR). In this article, the author examines the adequacy of the current provisions of section 92 of the Companies Act 71 of 2008 regarding MAPR and the recently promulgated rule of the Independent Regulatory Board for Auditors (IRBA) on MAFR (the MAFR rule) in addressing the issue of mandatory auditor rotation in South Africa. The author considers whether the provisions of the Companies Act 71 of 2008 regarding MAPR and the MAFR rule are adequate to promote an independent and objective external audit function for companies, as well as transparency, efficiency and accountability, while providing certainty for companies and auditors. The author first examines some of the key principles and policy considerations relating to the external audit of companies – namely, the significance of audits and auditors in the financial markets as well as the value of auditor independence and objectivity. This is followed by an examination of the provisions of section 92 of the Companies Act 71 of 2008 regarding MAPR and the recently promulgated MAFR rule in light of legislative developments in the United States, Canada, the European Union, Australia and India regarding mandatory rotation of auditors and audit partners. Based on the lessons to be drawn from the experiences of the above jurisdictions, the author then makes recommendations for appropriate reforms for South Africa in this important area of company law. This is followed by some concluding remarks.

scholarly journals The Development of Whistleblowing Laws in the United States and Europe (de lege ferenda remarks)

2021 ◽  
Vol 28 (2) ◽  
pp. 139-155
Author(s):  
Łucja Kobroń-Gąsiorowska
Keyword(s):  
United States ◽  
European Union ◽  
The United States ◽  
The European Union ◽  
Work Process ◽  
Free Markets ◽  
Member States ◽  
Communist Countries ◽  
Established Democracies

Corruption, harassment in a workplace, practices contrary to the correct work process, and many others are irregularities that can arise in any enterprise. This is a problem that affects established democracies and free markets and post-communist countries that are transitioning to democracy and market economies. While the causes of irregularities vary, the tools often suggested tackling them include that do not necessarily encourage potential whistleblowers to report them, whether inside or outside the organization. This article discusses the role of whistleblowing as a whistle­blowing tool. Describes the law and whistleblowing in a comparative context, focusing on the United States and the European Union. The article then concludes with recommendations for strengthening whistleblowing in Europe, where reporting irregularities is just beginning, and the level of protection differs between the Member States.

The Shifting Politics of Sustainable Seafood Consumerism

2018 ◽  
pp. 330-348 ◽  
Author(s):  
Simon R. Bush ◽  
Cathy A. Roheim
Keyword(s):  
United States ◽  
European Union ◽  
Value Chain ◽  
The United States ◽  
The European Union ◽  
Political Consumerism ◽  
Conventional View ◽  
Sustainable Seafood ◽  
Supply Mode

Seafood has emerged as a key testing ground for understanding the role of different value chain actors in driving sustainability. The conventional view, developed in the late 1990s, is that sustainable seafood is driven by the choices and practices of consumers in major importing markets, such as the United States and the European Union. This view led to the development of a range of boycott and buycott initiatives in the 2000s. Many of the buycott initiatives have been formalised into consumer-facing tools, such as certification, recommendation lists, and traceability. More recently celebrity chefs have also joined in, shaping sustainable seafood as cuisine. While these initiatives and tools initially assumed a demand-shapes-supply mode of political consumerism, they have all broadened to include multiple modes of political consumerism. The future of the sustainable seafood movement is therefore dependent on a clearer articulation of diverse modes of political consumerism.

ICTs and Border Security Policies in the United States and the European Union

2011 ◽  
pp. 373-401 ◽  
Author(s):  
Peter Shields
Keyword(s):  
United States ◽  
European Union ◽  
The United States ◽  
Border Security ◽  
Surveillance Systems ◽  
The European Union ◽  
Security Issues ◽  
Life Chances ◽  
Management Regime

ICT-related initiatives have dominated the border security strategies of the United States and the European Union in recent years. One set of surveillance systems fortifies the borderline. Another set is creating new frontiers away from the traditional boundary. The objectives of this chapter are to provide a detailed mapping and critical assessment of this two-pronged approach. With respect to the assessment, two arguments are made. First, there are good reasons to believe the approach is not enabling the authorities to deter identified border threats. Second, the approach is contributing to a border management regime that is having an increasingly divergent impact on the mobility and life chances of different groups and populations. In conclusion, it is suggested the inefficacy of the approach is due to contradictions and blind spots embedded in policy maker’s approaches to security issues. Remarks are offered as to why US and EU decision makers emphasize the role of ICTs as they seek to reconstitute their respective borders.

Sustainable Agriculture The United States versus the European Union

2010 ◽  
Vol 1 (4) ◽  
pp. 26-31 ◽  
Author(s):  
Carson H. Varner ◽  
Katrin C. Varner
Keyword(s):  
United States ◽  
European Union ◽  
Genetically Modified Crops ◽  
The United States ◽  
World Population ◽  
The European Union ◽  
Sustainability Issue ◽  
The World ◽  
Two Sides

This paper examines developing issues and attitudes that unite and divide the United States and the European Union as the discussion and regulation of agriculture evolves. While some terms, such as “organic,” are defined in law in both the United States and European Union, the increasingly used “sustainability” is an evolving concept. The main sustainability issue is how to provide food and fiber for a rapidly growing world population. In this context, the role of biotechnology is questioned. Americans tend to favor what are sometimes called genetically modified crops, while Europeans remain cautious. Europeans lean more toward organic farming, while Americans assert that much of the world will starve if organic methods are required. This paper reviews the directions that the discussion of these issues is taking and will show areas of agreement and where the two sides diverge.

The Role of Regulatory Impact Assessment in Fighting Climate Change and the Economic Downturn: A EU-US Perspective

2010 ◽  
Vol 1 (3) ◽  
pp. 251-257 ◽  
Author(s):  
Jacopo Torriti ◽  
Ragnar Lofstedt
Keyword(s):  
Climate Change ◽  
Impact Assessment ◽  
The United States ◽  
Regulatory Competition ◽  
Economic Downturn ◽  
The European Union ◽  
The Us ◽  
Regulatory Impact ◽  
The Eu

In times of low economic growth and post-Copenhagen climate talks, a number of reasons for regulatory competition and cooperation between the United States and the European Union coexist. This paper discusses the role of Impact Assessment between the US and the EU on responses to the economic downturn and climate change. It is argued that, in the future, IAs will be an instrument through which it will be possible to read the level of cooperation and competition between the US and the EU, particularly on economic trade and environmental regulation.

scholarly journals The European Union and Image Resilience during Times of Crisis: The Role of Public Diplomacy

2017 ◽  
Vol 12 (4) ◽  
pp. 257-282 ◽  
Author(s):  
Mai’a K. Davis Cross ◽  
Teresa La Porte
Keyword(s):  
United States ◽  
European Union ◽  
Public Diplomacy ◽  
The United States ◽  
The European Union ◽  
Negative Perceptions ◽  
Exogenous Factors ◽  
Shed Light

A resilient actor is one with the capacity to recover from setbacks and obstacles, whether stemming from endogenous or exogenous factors. Beyond actual recovery, this article argues that there is also an important perceptional dimension. Image resilience is the capacity on the part of actors to overcome and deal with the widespread negative perceptions that often follow on the heels of these setbacks. The article argues that the ability to cultivate image resilience rests significantly on the power of public diplomacy. Through establishing a strong image for an actor over the longer term, public diplomacy enables that actor to be more resilient during times of crisis. The European Union is a particularly good case study to shed light on this. Using original interview evidence, this article examines a specific example of how the European Union was ultimately able to strengthen its image resilience in the United States through public diplomacy.

The Notion of Consensus as a Route to Democratic Adjudication?

2012 ◽  
Vol 14 ◽  
pp. 663-695
Author(s):  
Bilyana Petkova
Keyword(s):  
European Union ◽  
The United States ◽  
The European Union ◽  
Constitutional Courts ◽  
Federal States ◽  
European Court ◽  
Political Implications ◽  
The Us ◽  
Us Supreme Court

AbstractBuilding on the theory of democratic constitutionalism, I assess the political implications of the constitutional space formed by the Court of Justice of the European Union (CJEU), the European Court of Human Rights (ECtHR) and national constitutional courts in Europe. Democratic constitutionalism helps situate the role of constitutional courts in stimulating a degree of consensus, necessary for governance of heterogeneous communities such as the United States and the European Union. Questions of legitimacy and confidence in the judiciary come to the fore. I examine a mechanism used by the US Supreme Court, the CJEU and the ECtHR alike to foster democratic constitutionalism: in order to confront challenges to judicial legitimacy and remain responsive to the extra-judicial environment, these courts rely on majoritarian trends, or consensus, inspired by, but not limited to, the constitutional law of federal states and member countries.

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