Impact of audit tenure and audit rotation on the audit quality: Big 4 vs non big 4

This paper examines the effect of audit tenure and audit rotation on audit quality. This study also examines whether this effect of the rotation is different between the Big 4 and non-Big 4 audit firm. This research was conducted in Indonesia, which is one of the few countries that not only implementing audit partner rotation but also mandatory audit firm rotation. However, in 2015, the mandatory audit firm rotation in Indonesia was abolished. The results show that the relationship between the tenure of auditor and audit quality is not significant. Audit firm rotation positively impacts audit quality, and the positive impact is lower in Big 4. In non-Big 4, audit partner rotation has no effect on audit quality, but audit firm rotation could improve audit quality. Meanwhile, in Big 4, audit partner rotation is sufficient to improve audit quality because they have sufficient partners to perform a quality review. From this study, the Indonesian government can consider the urgency to reimpose the mandatory audit firm’s rotation or make a policy of the need to merge small non-Big 4 audit firms to increase the number of audit partners, and it will result in better inter-partner review processes to produce higher-quality audits.