Consultants to become auditors 205



  • Hi everybody.
    there is a lot of information about independence of auditors, and what is prohibited for them to do, but I did not found any information about the opposite situation - when consultans are to become an auditors of the company. The situation is as follows: currently we’ve got one of big-4 to perform consultancy services and help to implement SOX. Is it possible to hire this company as external auditor after the implementation of SOX? If yes - can we do it in short time after the process completion, or in x-years time (how many?)?
    Thanks for replies
    XXX



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  • SOX has specific requirements regarding services provided by independent auditors. I believe that hiring one of the big four to do the SOX consulting work for you would preclude them from accepting the position as your external auditor.



  • SOx Title II deals with Auditor Independence
    Regardless…it is just bad form to have the consultants who do the implementation come in and do the audit (actually it is just wrong to audit that which your firm has implemented…where is the independence and objectivity?)
    The big 4 firm should have their own rules about this (when I was with one, they said 1 year, and it could not involve the partner or staff involved in the implementation). My rule - I never use consultants as auditors and vice versa…unless a long time has passed.



  • The Act doesn’t cover this scenario very well, but there is generally a 12 month period for ‘conflicts of interest’ which this certainly would be.



  • I worked in a BiG 4 firm for 5 years on the Tax side and the audit side. If we were providing any internal audit or outsourcing services, we would not be able to get the year end audit work. We would be auditing our own work.



  • We use for our external audit preparation PwC; the external audit will be executed by KPMG. Of course it could be vice-versa.


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