Auditor Going to Work for a Client???

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    There was a discussion at our office amoung the audit staff about rather or not an auditor could go work for a client at a head finance position? About how it has to be handled and if there is a difference between a staff auditor going to work vs. a partner? What do you guys say? I said that there has to be a one year cooling off period no matter a partner of a staff member…



    I'm not 100% sure of the answer to your question but I do have some experience with this. I started at a Big 4 firm right out of college. I was burned out after my first busy season not to mention I had a car accident b/c I fell asleep at the wheel after working some ridiculously long hours. I had really liked one of the clients I worked on during busy season and it was fairly close to my house, so I contacted the controller about a job. I got hired to do A/P b/c that was the only position they had open at the time. I know the controller contacted the accounting firm I worked for to make sure there wouldn't be any issues and there weren't. I never had to sign anything or do anything different in my job b/c I was a former auditor. And most of the people that I worked on the audit with came back the next year. Maybe it would have been different if I was a more experienced staff member instead of a 1st year? I'm not really sure… but I at least wanted to post my experience with an auditor going to work for a client.



    It is VERY common for staff & seniors to leave. No cooling off period. Oftentimes the client just poaches them & the firm isn't always too happy about it lol.

    It's sorta wierd that you are a staff and are saying that staff should have a one year cooling off period ;). I don't think you have a good (any?) argument myself.



    Correct me if I am wrong, but I believe it depends on the position you transition in to. However unlikely, I believe there would be a cooling off period if you went from staff or senior to say a controller.



    A little more information…the job we are talking about is the controller position….and we were having a discussion as to if either a staff, senior, or partner would have to wait any time before going.



    A lot of the time there are “cooling off” periods in written contracts somewhere. It's a formality for low-level staff, but can often get more stringent for higher management positions.


    When I was in audit, a senior manager went to work for a client as controller. There was no cooling off period, nor is there one required if I remember correctly from my AUD materials. If a partner went to work for a client it's a different story and especially if it's an SEC client.

    But let me tell you, former auditors make the worse clients!



    Violation of independence for a partner in the audit to take a management position with the audit client, for *I believe* 3 years. For in-charge, i'm not sure, for staff and seniors it isn't a problem.



    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).

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