Impact of Auditor Rotation on Audit Quality in India

Ilton Cutinho

Impact of Auditor Rotation on Audit Quality in India

Author(s)	Mr. Ilton Cutinho
Country	India
Abstract	The mandatory rotation of auditors which is institutionalised in Section 139 of the Companies Act, 2013, is a paradigm shift of the corporate governance architecture of India. This regulatory intervention is to break the cosy nexus between auditors and management by requiring individual auditors to be rotated after five years and audit firms after ten years in classes of companies with prescribed rotation requirements. This term paper is a comprehensive qualitative study of the effects of this requirement on the quality of audit in the Indian setting. Through the use of a strict qualitative research design based on the thematic analysis of regulatory inspection reports, judicial orders and academic literature between the years 2014 and 2025, the research question that will be addressed is whether the legislative purpose of a fresh look has been adopted into material advances in financial reporting reliability. The study heavily relies on the 2023-2025 Audit Quality Inspection Reports (AQRR) by the National Financial Reporting Authority (NFRA) that find numerous repetitive and systemic patterns of undermined independence, inadequately prepared documentation, and the inability to test Related Party Transactions (RPTs) despite the rotation regime. The results indicate that there is a certain paradox: on the one hand, rotation has effectively broken established tenure; on the other hand, there is no guarantee of increasing the level of professional skepticism. Rather, structural impediments, namely the ubiquitous power of audit network affiliations, the offering of non-audit services which are prohibited, and the so-called competence gap of the initial years of a new engagement still hamper the quality of the auditing. This paper concludes that though Mandatory Auditor Rotation (MAR) is a legitimate structural protection, it cannot act as a panacea on its own and a cultural change toward quality-focused assurance rather than the compliance-based auditing paradigm is needed. They are followed up with practical implications to regulators, audit committees and practitioners and imply that the enforcement capacity of NFRA should be enhanced and that the frameworks governing audit networks should be revisited.
Keywords	Auditor Rotation, Audit Quality, Companies Act 2013, National Financial Reporting Authority (NFRA), Auditor Independence, Corporate Governance.
Field	Business Administration
Published In	Volume 7, Issue 2, March-April 2026
Published On	2026-03-18

View / Download PDF File

E-ISSN 3048-7641

doi

CrossRef DOI is assigned to each research paper published in our journal.

AIJFR DOI prefix is
10.63363/aijfr

Downloads

Research Paper Format Copyright Permission Form and Undertaking Form Cover Page Vol 7 Isu 1 Cover Page Vol 6 Isu 6 Cover Page Vol 6 Isu 5

All research papers published on this website are licensed under Creative Commons Attribution-ShareAlike 4.0 International License, and all rights belong to their respective authors/researchers.

CC-BY-SA

About AIJFR Fees & Payment Current Issue Publication Archive	Submit Research Paper Track Submission Status Publication Guidelines Publication Ethics Peer Review & Plagiarism	Join as a Reviewer Editors & Reviewers Reviewer Referral Program Get Reviewer Membership Certi.	Website/Journal Policies Usage Policy Content Policies Privacy Policy

Contact Us		+91-9898-79-39-59	editor@aijfr.com

Advanced International Journal for Research

A Widely Indexed Open Access Peer Reviewed Multidisciplinary Bi-monthly Scholarly International Journal

Impact of Auditor Rotation on Audit Quality in India

Share this