- 15 Marks
AAA – May 2017 – L3 – Q7 – Audit of Corporate Governance
Draft a memo outlining suggestions, advantages, and disadvantages of audit firm rotation.
Question
The need for auditor’s rotation has been a topic of discussion following various major corporate failures in recent years. The Central Bank of Nigeria (CBN) in 2006 introduced mandatory audit firm rotation as part of effective corporate governance of banks in Nigeria. The board of Aluwo Bank Plc has complied with this policy and are now reviewing its implementation. Some of the directors are not clear about the form that auditor’s rotation takes. While some have argued in favour of the Central Bank of Nigeria (CBN) policy on audit firm rotation, others are against it, claiming it has not achieved the desired objective.
Required:
Draft a memo to the board of Aluwo Bank Plc. which sets out clearly:
a. Two different suggestions about how auditor rotation could be achieved. (5 Marks)
b. Arguments in favour of audit firm rotation. (4 Marks)
c. Arguments against audit firm rotation. (6 Marks)
Find Related Questions by Tags, levels, etc.