Academic journal article Journal of Accountancy

ISB Issues Employment Standard

Academic journal article Journal of Accountancy

ISB Issues Employment Standard

Article excerpt

In July the Independence Standards Board reaffirmed its earlier (June 1) approval of ISB Standard no. 3, Employment with Audit Clients. The guidance addresses independence concerns and updates rules for situations in which a professional or partner of an audit firm decides to join an audit client.

According to the underlying principle of the standard, if an audit firm professional joined an audit client, the firm's independence would be impaired unless it had safeguards in place to eliminate the possibility of inappropriate influence resulting from the professional's knowledge and relationships with the audit firm.

The ISB believes that a program of safeguards will effectively protect independence and that audit firms should have such a program in place, precluding conflicts. One safeguard, for example, is that a professional must report to the firm conversations with an audit client about possible employment. Another safeguard requires that person's immediate removal from the audit engagement. The firm would then review that professional's previous work to assess whether he or she exercised appropriate skepticism while on the job.

In a situation where a former firm professional joins an audit client within one year of disassociating from the firm and the professional has significant interaction with the audit team, the standard requires an additional review of the next annual audit following the professional's acceptance of employment. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.