audit rotation

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The practice of appointing an audit firm for a set period, such as five years, after which it must give up the position. The aim is to reduce the effective control of the auditor by directors, who may threaten to remove the auditors if they do not comply with their requirements. However, the practice is generally criticized on the grounds of cost, disruption, and the consequent reduced quality of the audit work.

Subjects: Accounting.

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