Do the Audit Partner Rotation Requirements Apply to Small Accounting Firms?
The SEC provided an exemption from the partner rotation requirements for accounting firms with fewer than five audit clients and fewer than ten partners. The SEC indicated, however, that in order for a small firm to qualify for the exemption, the Public Accounting Oversight Board must conduct a review of all of the firm’s engagements subject to the rule at least once every three years. The SEC indicated that this special review should focus on the overall quality of the audit and in particular on the independence and competence of the key personnel on the audit engagement teams Auditor “Cooling Off” Periods Alleged accounting improprieties at Enron managed to slip by the supervision of the outside auditors. This has been attributed to the cozy relationships that existed between audit engagement partners at Enron’s outside accountants and recently hired in-house Enron accountants that used to work for Enron’s outside accountants. The fact that in-house auditors of Enron had so recently
