Mandatory audit firm rotation: South African academics' perspective

The purpose of this study is to utilise field surveys to comprehend South African academics perception of mandatory audit firm rotation (MAFR) as ruled by the Independent Regulatory Board for Auditors in June 2017, including the nature of any possible direct or indirect consequences thereof. The findings reveal that auditing academics perceive the current implemented regulations, practices and standards as adequate to regulate auditor independence. Furthermore, they do not believe that MAFR will improve independence but likely the perception thereof in the minds of the investing public. Academics believe that MAFR will result in a loss of client-and industry-specific knowledge with the outgoing auditor and the new incumbent would experience a steep learning curve in the first year, which presents a significant risk to audit quality. Moreover, there is a perception that MAFR will not lower market concentration. However, uncertainty was expressed regarding its ability to improve transformation in the profession. The study contributes to the ongoing debate whether the efficacy of the various objectives of the regulator with regard to MAFR.