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R524.4
The firm shall ensure that no significant connection remains between the firm
or a network firm and:
A former partner who has joined an audit client of the firm; or
A former audit team member who has joined the audit client, if either
has joined the audit client as:A director or officer; or
An employee in a position to exert significant influence over
the preparation of the client’s accounting records or the
financial statements on which the firm will express an opinion.
sir in this code, it is clearly written former partner(and no necessarily audit team member)
so does that mean that if a particular former partner who became a director in client company has a significant connection with audit firm, then the only two options are either to end the connection or that the AUDIT FIRM SHOULD RESIGN ALTOGETHER?The future of an audit firm and its client base cannot be dictated by the action of one partner deciding to join an audit client. The audit firm would have to sever all ties with the former partner.
For example, the former audit partner could not provide consulting services to the audit firm.
Yes sir, i understood that
But what if the firm refuses to sever the ties
Then the only way is resignation of the firmThen it’s the firm’s choice! But since the partner has abandoned the firm, why would the firm not act in it’s own interest and sever the ties?
thank you sir.
one last doubt, for example if a firm has just begun the auditing business and has only one senior partner(like ceo etc..) in this case if the senior partner:
1) has an immediate family member a director in client
2) has taken a preferential loan from client
or likewiseIN THIS CASE THE ONLY OPTION LEFT IS THAT THEY CANNOT ACCEPT THE AUDIT ASSIGNMENT SINCE THERE IS NO ONE TO TAKE THE POSITION OF SENIOR PARTNER FOR THE GIVEN AUDIT.
RIGHT SIR?
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