James Roberts, senior audit partner, BDO

Mandatory rotation is the intellectually idle’s answer to audit independence and market structure. It clearly offers market liquidity, in that everyone will have to change their auditors every few years, and thus appears to give a fillip to a stagnant market where switching rates are very low.

On the face of it, this should please those firms who have been seeking more movement and independence in the market for audits. A number of countries have had legal requirements for audit firms to be rotated, including Brazil, India, Italy and Singapore. In 2002, the SDA Bocconi School of Management carried out a study into the impact of mandatory rotation in Italy, concluding that it would lead to more cost, poorer audit quality and greater market concentration among the largest firms.