Former Auditors Essay Example | Topics and Well Written Essays - 750 words

Former Auditors - Essay Example Sub Section 324 CI does not allow a former partner of an audit firm to become a member of the board of directors or other officer of a Public Company which is listed, if that former partner has remained part of the audit team being involved in the audit of that public listed company at any time during the preceding two years of that partner’s retirement.On the other hand, more specific legislative requirements relating to the independence test of the former auditors can be found in Sub Section 324 CF (7), which states that a person is regarded as satisfying the test of independence if,i.  He does not have any control over the operations or financial policies of the audit firm of which he was a partner or an employee;ii.  He does not involve himself in the activities and other operating matter of the audit firm of which he was a partner or an employee;iii.  He does not hold any kind of rights as against the audit firm or any of the members of the audit firm with respect t o the termination of such person from the partnership of that audit firm or other interest of whatsoever;iv.  He has no monetary arrangements or agreements with respect to performance of any professional service with the audit firm from which he so retired. However, this does not include:a.  An agreement under which the partner so retired will be given payments of specific amounts at regular intervals of time, provided that such payments are predetermined and are independent in direct and indirect.... He has no monetary arrangements or agreements with respect to performance of any professional service with the audit firm from which he so retired. However, this does not include: a. An agreement under which the partner so retired will be given payments of specific amounts at regular intervals of time, provided that such payments are predetermined and are independent in direct and indirect ways from the earnings being made by the audit firm, or b. An agreement under which the partner so retired will be given payments of specific amounts at regular intervals of time, provided that such payments, although not predetermined, are calculated on a predetermined basis and are independent in direct and indirect ways from the earnings being made by the audit firm; and v. He has, apart from the agreements mentioned above, no other financial or monetary arrangements or agreements with the audit firm for the receipt of payment under any name which is related, either directly or indirectly, to th e revenues earned by the audit firm, whether such businesses do or do not relate to such person (Corporations Act). The independence test requirements as presented in (I), (ii) and (v) above are independent of each other and these requirements do not seem to cater any serious issues related to independence test in relation to a former audit partner or other professional. In other words, these requirements are not the determinants of the fact that independence exists. This is so because a retiring or former professional cannot eliminate altogether the existence of his past relationship with an audit firm or other professional body (Brayshaw). All these independence testing requirements and regulations are in fact meant for ensuring that a retired or former audit firm partner has