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Audit Partner Rotation

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Submitted By rclemente01
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With the enactment of Sarbanes & Oxley of 2002, Section 203 can be found integrated into the Securities Exchange Act of 1934, under Section 10A: (j) AUDIT PARTNER ROTATION – It shall be unlawful for a registered public accounting firm to provide audit services to an issuer if the lead (or coordinating) audit partner (having primary responsibility for the audit), or the audit partner responsible for reviewing the audit, has performed audit services for that issuer in each of the 5 previous fiscal years of that issuer.[1] For the purpose of clarity it is deemed that the Lead and Concurring partner perform the critical functions that affect the conduct and effectiveness of an audit engagement.[2] With respect to Section 203 of the Sarbanes and Oxley Act of 2002, the initial law was silent with respect to the time out period; therefore, the SEC ruled that the appropriate length would be a minimum of 5-years[3]. It is the belief of the SEC that the auditor’s independence shall be compromised after its fifth year of service and in fact their independency would no longer exist, as they would be auditing their own work beyond that timeline and that there was a real need for new eyes to further enhance the auditor’s independence. It should be noted, the SEC determined that certain partners are deemed specialty experts and that their primary function is to provide technical resources to the audit team members; therefore, they are to be excluded from rotation.[4] As they have no oversight of the audit activities and have limited interaction with the management. After further analysis of both the Sarbanes & Oxley Act of 2002 and the SEC’s final ruling with regards to the Partner Rotation mandate. I concluded that the primary objective of the law is to enhance the auditor’s independence and to increase the effectiveness and reliability of the audit function, as

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