Hiring External Auditors 285



  • This post is deleted!


  • This post is deleted!


  • This post is deleted!


  • This post is deleted!


  • I would have thought that normal secondment rules would apply to avoid conflicts of interest.

    1. The secondeee would not be able to work on the audit for a period of time afterwards; and
    2. They would have to work under the direction of the company’s management rather than their own firm.


  • I’m sorry, I wasn’t very clear in my initial post. What I meant to day was… Are there any guidelines on recruiting a staff member who works for your external audit firm to join your internal audit department?



  • Non compete they may have signed, non disclosures… they would need to have been ‘released’ from the firm they are at and have no conflict of interests.



  • Are there any guidelines on recruiting a staff member who works for your external audit firm to join your internal audit department?
    No. In principle there is nothing to stop you from doing this unless you have a prior agreement with your audit firm not to ‘poach’ their staff. In reality a very large percentage of auditors go on to work for their former clients.



  • Our attorney advised us against hiring at or above our Senior, so we can hire any staff. However, our engagement letters have 40% placement fee of first year salary for recruiting ANY employee (not just one on our engagement)…



  • However, our engagement letters have 40% placement fee of first year salary for recruiting ANY employee (not just one on our engagement)… %0AOops :oops:



  • Under SEC independence rules adopted in May 2003, ‘an accounting firm is deemed to be not independent with respect to an audit client if a former member of the audit engagement team is employed by the issuer in a ‘financial reporting oversight role’ unless the individual had not been a member of the audit engagement team during the one year period preceding the initiation of the audit.’ (See SEC Release No. 33-8183 at sec.gov).
    An oversight role includes, among others, CFO, Controller, Chief Accounting Officer, Director of Internal Audit, Financial Reporting Manager, etc.
    If your audit firm is determined not to be independent, you are in BIG trouble. Hiring a staff person from your external auditor for an internal audit staff role may be OK, but your best course is to look elsewhere. No reason to take a risk.



  • The mian audit firms are pretty large and available talent pool to recruit from is limited so this issue is going to come up from time to time.
    My understanding is that the following scenarios are acceptable:

    • to hire someone from your audit firm that was not part of your audit team
    • to hire someone who has been part of your audit team but not for the last 12 months
    • to hire someone from your audit team but not to a senior financial management role - it is the role that the auditor has in your company that is important not their role in the audit firm.

Log in to reply