The Effect of Audit Partner Rotation on Professional Skepticism and Judgment Quality in Auditing

Posted: Jul 09, 2019

• Evan Hart
• Amelia Daniels
• Jasper Lewis

Abstract

The mandatory rotation of audit partners represents a cornerstone of contemporary audit regulation, implemented globally as a mechanism to enhance auditor independence and professional skepticism. Despite widespread adoption, the theoretical foundations and empirical evidence supporting partner rotation remain surprisingly ambiguous. This research addresses critical gaps in understanding how rotation mechanisms actually influence the cognitive processes underlying professional skepticism and judgment quality. Traditional approaches have predominantly focused on outcome-based measures of audit quality, neglecting the intermediary psychological and behavioral mechanisms through which rotation exerts its effects. Our study breaks new ground by examining the cognitive dynamics of rotation, moving beyond simplistic assumptions about fresh perspective to explore how temporal patterns, knowledge transfer processes, and organizational contexts interact to shape auditor judgment. Professional skepticism constitutes the bedrock of audit quality, representing a mindset that includes questioning mind, suspension of judgment, and search for verification. The central research question driving this investigation concerns how different rotation parameters affect the manifestation and sustainability of skeptical attitudes throughout the audit process. We challenge the conventional binary perspective that contrasts fresh eyes with accumulated experience, instead proposing a more nuanced understanding of how rotation can be optimized to maximize cognitive benefits while minimizing disruption to audit effectiveness. This research makes several distinctive contributions to auditing literature. First, we develop and validate innovative measures of professional skepticism that capture both explicit behaviors and implicit cognitive processes. Second, we introduce a computational framework for analyzing audit documentation that reveals patterns of skeptical inquiry not apparent through traditional methods. Third, we identify specific conditions under which rotation enhances