As it is known the rotation of an auditor serving a particular company is mandatory in Europe and in the world. Such a rule is intended to strengthen the independence of the auditor, better protect the interests of the investor, improve the quality of the audit and generally revive the market.
Meanwhile, the results of the recent academic study published in The Accounting Review conducted by the HEC Montreal Business School and the University of Alabama show that the rotation of the auditor, as well as the change of the key audit partner, are not effective in most cases. Such actions do not improve the quality of the audit, do not affect the quality of financial statements and do not lead to higher performance of the company subject to auditing.
By the way, many countries of the world at different stages of implementation of the rules of obligatory rotation of auditors changed it taking into account the specifics of the country. For example, South Korea, Argentina and Brazil apply the rule of mandatory rotation of an external auditor only to companies of certain sectors of the economy.
The countries of the European Union have not reached full agreement on this issue yet. So, the application of the rule of mandatory rotation of auditors varies in each of the EU Member States. Thus, only Spain and Italy have agreed to periodically change the auditor, while other countries either do not comply with this rule at all or apply it selectively.
In the United States public companies are allowed to cooperate with the same auditor for an unlimited period of time.