Subsequent Employment

Question 1

Important: If an attest client comes to you and asks you to consider working for them. Is there an independence problem and what should you do?

Answer 1

• Promptly report such consideration or offer to appropriate person at the firm.
• removes themselves from the engagement until the offer is rejected or the position is no longer sought

Question 2

What if one your colleagues has an offer on the table and they haven’t done anything. Should you step in?

Answer 2

• You have a responsibility to report that to the firm

Question 3

A firm’s independence will be impaired when a partner or professional employee goes to work for an attest client in a key position, unless:

Answer 3

1) The employee cannot influence the accounting firm’s operations or financial policies
2) former employee doesn’t participate in the firm’s business (including consultation, firm provides an office and related amenities, name cannot appear on firm directory
3) Modify the engagement procedures to adjust for the risk. Ensure that team members have appropriate experience and stature so they don’t get bullied by their former co-worker.

Question 4

If the former employee joints the client in a key position within one year of disassociating from the firm, and has significant interaction with the attest team, what needs to happen?

Answer 4

An appropriate professional in the firm should review the subsequent engagement to determine whether team maintained skepticism.

Question 5

SOX has strict rules when someone leaves a firm to go to a public company.

• Who do they apply to?
• What positions should they avoid?

Answer 5

Applies to:

• Lead partner
• Concurring partner
• other member who provides more than 10 hours of work

Avoid:

• CEO, CFO, Controller, CAO or equivalent
• Any financial oversight

How long do they have to wait?
- One year cooling off period preceding the beginning of the audit