The Best Argument Against Mandatory Audit Firm Rotation Is That

question 41

Multiple Choice

The best argument against mandatory audit firm rotation is that:

• A) Audit fees will tend to increase when a highly qualified and experienced auditor is arbitrarily forced to stop serving an audit client
• B) It will lead to undignified competition as unprincipled successor auditors reviewing a predecessor auditor's work will be publicly critical of the predecessor to bolster their own reputations
• C) The "learning curve" efficiencies achieved by the first audit firm will be sacrificed when a new, inexperienced successor auditor is appointed
• D) The ethical leadership provided by large CPA firms will be diluted by the market entrance of newer, more aggressive competitors

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Definitions:

External Causes

Factors or events outside the body that can lead to injury or disease, such as accidents or environmental hazards.

Medicare

A federal health insurance program in the United States for people aged 65 and older, and for some younger people with disabilities.

DRG System

A system of classifying hospital cases into groups (Diagnosis-Related Groups) to facilitate payments for healthcare services based on the type of care provided.

UHDDS

Uniform Hospital Discharge Data Set, a system for collecting and coding patient data for statistical analysis and health care decision making.