The Australian Securities and Investments Commission is warning audit firms to ensure their rotation schedules are in order. It says the next audit inspection will pay particular attention to the practical implementation of auditor rotation requirements.

Introduced on July 1, the rules aim to keep any individual auditor from working on the same account for too long. The “5-7” requirement states that an auditor cannot work with the same company for more than five out of any seven consecutive financial years.

Executive Director of Compliance Jennifer O’Donnell says rotation is a “foundation element” of ensuring auditor independence. ASIC is therefore very interested in how firms are implementing the new rules.