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Is there any ethical or independence issues with a member of an audit team who is no longer on that team, or by extension the audit firm, that invests in the company that they would have audited previously?
To illustrate:
John completes an audit of Company X in June 2021, leaves the audit firm in July 2021 and then proceeds to invest in Company X in August 2021. Is he in breach of an ethical code or not allowed to do so?It would be quite difficult for John to show his decision was not based on inside information – so using it is a criminal offence – regardless of the provisions of the ethical code. Though if found guilty of such an offence that would be grounds for having him struck from membership of any professional accounting body.
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