So, I was reading the material for the Ethics exam, and this very issue is covered in there.
When AICPA rules apply (non-public client), the book refers you to the below webpage...
It's section .04 101-2 Employment or Association with Attest Clients
When SEC rules apply, this is what the book says (I'm quoting "Professional Ethics: The AICPA's Comprehensive Course" by Catherine Allen)...
Various employment matters may impair independence. For example, a former firm partner or professional may take a key position with an SEC Audit Client. In addition, the SEC imposes a "cooling-off period" on auditors who assume key financial oversight positions with Issuers. This and some other SEC rules are stricter than the AICPA rules.
Let's assume a professional employee of AB Accountancy (AB) assumes either an accounting role, such as an assistant controller or accounts payable manager, with a client. Or, perhaps, a partner of AB takes a financial reporting oversight role, for example, CFO, at an SEC Audit Client.
To maintain independence, what must happen?
1. The partner or professional cannot influence the firm's operations or financial policies (this condition also applies under AICPA rules)
2. A partner must be paid in full by the firm for his or her capital balance.
3. Amounts due the partner or professional cannot depend on the firm's future revenues or profitability, for example, payment arrangements should be fixed.
4. If not fully funded, AB must fully fund the partner or professional's retirement account.
Are there any exceptions to this rule? Yes. A former employee, not a partner or equivalent, who disassociated from the firm more than five years ago, would not need to meet these requirements, except that payments due the former employee must be fixed and immaterial.
Members of the audit team must meet a higher standard: the SEC requires a "cooling-off period" of one year before an audit team member may begin working for the client in a financial reporting oversight role, for example, as the Issuer's CFO, CEO, Internal Audit Director, or as a member of the board of directors (NOTE: This rule applies only to issuers).