If companies are required to rotate audit firms every five years, they are exposing themselves
to a higher possibility of a bad audit. First year audits have a much higher percentage of failing
than audits done is subsequent years. This means that every five years, auditors will perform
more audits that are not correct. Incoming auditors will have a “learning curve” during the first
year, which may lead to a lower quality audit. Currently, audit firms do not have to perform
many “first‐year” audits, because they can keep their clients for an extended period. New
audits for a company require much more work, and if the firm is trying to retain the client, they
may rush through procedures and miss something. The auditor may be more independent than
if they had previously audited the firm, but they also may perform a bad audit. In Spain, from
1991‐1995, audit firm rotation was required. A study was done that compared all the audits
performed in that time period to all audits performed five years after firm rotation was
recalled. The number of unqualified opinions issued only decreased 1.3% after firm rotation
ended (Barbadillo, Aguilar & Carrera, 2009). A percentage this small cannot be tied to audit firm
rotation, which means there was little change when firm rotation was implemented and
retracted.