In the wake of the financial crisis, regulators and shareholder activists alike have been revisiting the issue of auditor independence with a view towards requiring companies to periodically rotate their outside audit firms. Facing the capital markets’ shrinking trust in the decision usefulness of financial accounting and auditing as a result of the financial crisis, the European Commission (EC) in a regulation draft (EC 2011) is in quest of ways to reform the professional standards of accountants and auditors. The intention of the EC is to increase audit quality by reducing the expectation gap, to increase auditor independence and to prevent further audit market concentration. In order to increase auditor independence, based on actual autonomy (independence in fact) as well as on autonomy perceived as such by the capital markets (independence in appearance), the EC is considering introducing mandatory external rotation (audit firm rotation) principally after six years and with regard to a cooling off period of four years. While internal rotation (auditor rotation) stipulates changes within the audit firm, external rotation replaces the audit firm entirely, following a fresh start approach. Currently Italy is the only state in the European Union (EU) with audit firm rotation rules (since 1974), which, however, was not able to prevent the financial fraud scandal at Parmalat. Austria introduced external rotation for financial years beginning on January 1, 2004, but repealed it before it came into effect. Similarly, compulsory audit firm rotation does not longer exist in Greece and Spain.