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| Topic: |
Business
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| Number of pages / Number of words: |
4 / 1005 |
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Current auditors may be close personal friends with the former auditor as a result of working on the same team for years. Further, the current auditors likely consider the former auditor to be a person of competence and high integrity. As a result, the current auditors may overrely on the representation of their former colleague...
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As a result, the current auditors may overrely on the representation of their former colleague. Finally, because the former auditor will be intimately familiar with the audit approach, the potential for successfully hiding an accounting fraud or mismanagement of funds may increase.
(c) Section 206 of the Sarbanes-Oxley Act of 2002 states that the CEO, CFO, Chief Accounting Officer or person in an equivalent position cannot have been employed by the external audit firm during a one year “cooling off†period preceding the audit...
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