Should You Offer a Job to Your External Auditor?
Department
School of Accountancy
Document Type
Article
Publication Date
4-2000
Abstract
This article discusses the significance of external auditor. Companies searching for financial and accounting talent to join their senior executive teams often lure partners and other professional staff away from accounting firms that perform their annual audits. Livent Inc., the Toronto-based producer of Broadway shows, recently faced this exact problem when a former professional of its external audit firm joined Livent as a member of the financial executive team, and allegedly became enmeshed in a financial reporting fraud.Although there are risks associated with hiring an individual from the external audit firm's staff, companies routinely hire ex-auditors to fill numerous types of company positions. Most of these employment relationships benefit both the company and the ex-auditor, with no decline in the quality of financial reporting. Clients often prefer to hire former employees of their audit firm because former auditors typically possess numerous attractive attributes. The level of training in an audit firm, and exposure to both numerous types of businesses and to complex accounting and financial transactions provide valuable experience.
Journal Title
The Journal of Corporate Accounting & Finance
Journal ISSN
1044-8136
Volume
11
Issue
4
Digital Object Identifier (DOI)
10.1002/1097-0053(200005/06)11:4%3C35::AID-JCAF6%3E3.0.CO;2-2