IRBA published the Mandatory Audit Firm Rotation rule on Friday, 2 June 2017, implementing firm rotation on a rotation period of ten consecutive years, and a cooling off period of five financial years.
The rule is applicable to audits of all Public Interest Entities (PIEs), and is applicable to the network as a whole.
This therefore means:
- An audit firm shall not serve as the appointed auditor of a PIE for more than ten consecutive financial years.
- Thereafter, the audit firm will only be eligible for reappointment as the auditor after the expiry of at least five financial years.
- The definition includes a network firm. Therefore, the audit cannot rotate to another Moore Stephens associated firm.
- When the entity is first classified as a PIE, the years appointed as auditor before the classification will be included in determining the timing of audit firm rotation.
The effective date is financial years commencing on or after 01 April 2023. Therefore, if the audit firm has served as the appointed auditor of a PIE for ten or more consecutive financial years before the financial year commencing on or after 1 April 2023, then the audit firm shall not accept re-appointment and will be required to rotate.
The rule can be found on the IRBA website, or
click here