Mandatory Audit Rotation
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[pic 1]ANTON DE KOM UNIVERSITEIT VAN SURINAMEFaculteit der MaatschappijwetenschappenApplication of Mandatory Audit Rotation to financial audits in SurinameThesis for the acquisition of the Bachelor of Science degree in Economics Name: Gabriëlle A. H. GoedhartMentor: Drs. Romeo Burgos RAParamaribo, September 2015PrefaceThis thesis is written in order to complete my bachelor’s study Economy at the Anton De Kom University of Suriname. Writing this thesis required an extensive amount of focus and dedication. My intention of becoming a Certified Public Accountant in the future has motivated the choice of my research subject: Mandatory Audit Rotation. During the qualitative research phase, the conducted interviews both with auditors and the companies they audit, proved to be very educational and presented me with the opportunity to hear unique views of the audit process in Suriname. As a result, I am excited and have a new found appreciation and drive for my future profession.Drs. Romeo Burgos RA, my thesis mentor, thank you for the willingness to mentor me, the professional advice, time, contacts and support. Your unique approach to this study has made me enjoy it even more. Further, I thank Drs. Ashween Angnoe RA for his honesty and input and the willingness to co-mentor my thesis.I want to thank the respondents who have participated in the interviews for their time and willingness to converse with me. An honorable mention goes out to Drs. R. Mayland RA and Drs. R. van Trikt RA for their honesty and openness pertaining to this subject and more.Besides the professional help, I am thankful to my friends and family for the moral support. I want to thank my mother, especially, for her love, support, and encouraging words. Thank you for making sure I complete my bachelor’s study on a very solid note.Foremost, I thank the Lord for giving me the strength, wisdom, patience and endurance to make it all possible.Paramaribo, September 2015Gabriëlle A. H. GoedhartTable of ContentsPreface 1List of Abbreviations 5Introduction 6General 6Problem statement 7Research question 71. The auditor’s profession 8The audit, the auditor and the audited 8Basic principles of the auditor 92. Mandatory Audit Rotation (MAR) 11General 11
Mandatory Audit Rotation in practice 13The auditing environment in Suriname 143. Methodology 144. Results 15Auditor’s opinion on applying MAR in Suriname 15Company’s opinion on introducing MAR in Suriname 15My opinion on introducing MAR in Suriname 17Conclusions & Recommendations 17Conclusions 17Recommendations 18References 20Books 20Journals 20Theses 23List of AbbreviationsAA Accountant AdministratieconsulentACCA Association of Chartered Certified AccountantsAFM Authority for Financial MarketsAudit Financial statement audit is a periodic examination of the books of accounts and records of an entity, carried out by an independent third party (auditor)CEO Chief Executive OfficerCFO Chief Financial OfficerCPA Certified Public AccountantFRA Financial Reporting ActGAAP Generally Accepted Accounting PrinciplesIFAC International Federation of AccountantsMAR Mandatory Audit RotationMFR Mandatory Audit firm RotationMPR Mandatory Audit partner RotationPCAOB Public Company Accounting Oversight BoardPIE Public Interest EntityRA Register AccountantROSC Report on the Observance of Standards and CodesSUVA Surinaamse Vereniging van AccountantsIntroductionGeneral The recent accounting scandals in the United States have led society to question the quality of the financial audit. Financial statements form an important view of the financial position of an organization. It is therefore important that stakeholders and other interested parties have a trusted and fair view of the organization’s proceedings and financial operations. This is the reason auditors are important, they act as an independent third party and judge whether the financials represent a fair and true view of the organization’s financial position. During the financial scandals, certain auditors issued unqualified opinions, even though there were clear misrepresentations in the financial statements, for example Enron. This led society to doubt, not only the credibility of the company and its business, but also the independence of the external auditor.