Abstract
We add to the literature on mandatory auditor rotation by examining the Florida government audit environment in which there exist both rotation and non-rotation regimes and in which there exists an independent measure of the joint quality of the audit and of the financial statements of the reporting entity. In this environment we compare rotating entities with entities that have established long-term relationships with their auditors. We find that after controlling for other factors believed to be associated with report quality, governments that rotate receive higher quality reports.
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