Final answer:
Under Sarbanes-Oxley, public accounting firms are required to rotate the lead partner and the partner reviewing the audit, but not necessarily every year. The rotation occurs after every five years.
Step-by-step explanation:
Under Sarbanes-Oxley, public accounting firms are required to rotate the lead partner and the partner reviewing the audit, but not necessarily every year. The rule states that the lead partner and the review partner must be rotated after every five years.
This regulation was introduced to increase audit quality, maintain independence, and prevent potential conflicts of interest. By regularly rotating the partners responsible for the audit, it helps bring fresh perspectives and reduces the likelihood of complacency or bias in the audit process.
Therefore, the statement that public accounting firms must rotate the lead partner or the partner reviewing the audit every year is False. The rotation is required, but it occurs after a five-year period.
The statement that public accounting firms must rotate the lead partner or the partner reviewing the audit every year under the Sarbanes-Oxley Act is false. According to Section 203 of the Sarbanes-Oxley Act, the lead and concurring audit partners must rotate off the audit after serving for a period of five consecutive years. There is then a required five-year 'time-out' period before those individuals can return to the audit. This requirement was put in place to maintain the independence and objectivity of the auditors by ensuring that they do not become too familiar with or reliant on their clients.