Sarbanes Oxley has introduced some much needed provisions for rotation of audit partner on an audit assignment. Section 203 requires that the lead audit partner and audit partner responsible for reviewing the audit (concurring partner) to rotate off the audit every five years. Thus, under the new provision, the lead partner and the concurring partner will be permitted to serve a maximum of five consecutive years with a five year time out period before resuming any new role that would again be subject to rotation.

Audit partners other than the lead and concurring partners, will be permitted to serve a maximum of seven consecutive years with a two year time out period. Such audit partners include partners of registrant company, parent company and those who lead audit of a subsidary whose assets and revenue constitute 20% or more of the consolidated total.

The effect of the provisions of Section 203 can be clearly seen. Companies are requesting involvement of the new lead partner early on in the audit to ensure that there is a streamlined transition from old audit partner. Similarly, audit committees are now playing an active role in the selection of lead partner. How this takes effect is something which only time will tell.

More Sarbanes Oxley Sections >>

> Section 108 Accounting Standards , Section 104 Inspection of Public Accounting Firms , Section 201 Services Outside the Scope of Auditors , Section 105 Disciplinary Proceedings