Browsing by Author "Taddese, Tesfamichael"

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    Perception of Auditors on Mandatory Audit firm Rotation and its Effect on Auditor's Independence in Ethiopia
    (Addis Ababa University, 2016-06) Taddese, Tesfamichael; Duressa, Degefa (PhD)
    This study was conducted on mandatory audit firm rotation and its effect on auditor independence in Ethiopia as the perception on external auditors. Factors affecting the ability of auditors to remain independent include long audit tenure, financial dependence on a single audit client, non-audit services provided to audit clients and ex-auditor employment with an audit client. It is therefore timely to examine the importance of auditor independence in the provision of reliable and credible financial information. The study used 5 point likert scale questionnaire and simple random sampling techniques were given to a sample of 84 external auditors who are found at different level and to examine auditors' perceptions of the effect of mandatory audit firm rotation on auditor independence. The results of the study revealed that 80.3% of auditors agreed that MAFR could safeguard auditor independence. The results also reveal that there is a significant relationship between mandatory audit firm rotation and auditor independence. Analyses of variance (ANOVA) were also conducted to test for the possibility of confounding effects arising from participants' background and experience. None of these variables were found to have a confounding effect on the experimental results. The results also disclose that the adoption of rotation rules wasn't given enough attention among the auditing firms in Ethiopia. Further research should be considered regarding other possible recommendations for enhancing the independence of auditors. Some examples include, appointment of company auditors by the state or an independent oversight body, and introduce a government approved body to verify the auditors’ work year after year to ensure they are carrying out their duties to their full capability. Keywords: Mandatory audit firm rotation (MAFR), Auditor Independence, Accounting and Auditing Board of Ethiopia (AABE)