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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Quality management (firm and engagement level)

Dunmore LLP audits Corvane Ltd, a listed entity. The engagement partner has served as key audit partner for six consecutive years. Corvane's audit committee asks whether the partner may continue for a seventh year. Under the IESBA Code, which approach is correct for a public interest entity audit?

The partner may continue for a seventh year, because the IESBA Code limits a key audit partner on a public interest entity audit to seven cumulative years. After that, rotation and a cooling-off period are required. Disclosure to the audit committee does not replace rotation.

  1. ARotation is not required if the partner discloses the length of service to the audit committee in writing
  2. BRotation applies only to the firm, not to individuals, so the partner can continue indefinitely
  3. CThe partner must stop acting as key audit partner after a maximum of seven years' service, followed by a cooling-off period, so the seventh year is permitted and rotation is then requiredCorrect
  4. DThe partner must rotate immediately after five years, so continuing into year six already breached the Code

Explanation

The IESBA Code requires the individual to be the key audit partner for no more than seven cumulative years on a PIE audit, followed by a cooling-off period (normally five consecutive years for the engagement partner). The partner has served six years, so a seventh year is allowed. The five-year option misstates the limit, and disclosure does not remove the rotation requirement.

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