UK: long association with the audit engagement - APB issues revised Ethical Standard 3

The Auditing Practices Board has published a revised version of Ethical Standard 3 - Long Association with the Audit Engagement. The revised standard increases the audit engagement partner's maximum period of association with the audit engagement from five to seven years in circumstances where (to quote directly from the standard):

... the audit committee (or equivalent) of the audited entity decide that a degree of flexibility over the timing of rotation is necessary to safeguard the quality of the audit and the audit firm agrees, the audit engagement partner may continue in this position for an additional period of up to two years, so that no longer than seven years in total is spent in the position of audit engagement partner. An audit committee and the audit firm may consider that such flexibility safeguards the quality of the audit, for example, where:

• substantial change has recently been made or will soon be made to the nature or structure of the audited entity’s business; or
• there are unexpected changes in the senior management of the audited entity. 
  

In these circumstances alternative safeguards are applied to reduce any threats to an acceptable level. Such safeguards may include ensuring that an expanded review of the audit work is undertaken by the engagement quality control reviewer or an audit partner, who is not involved in the audit engagement".