Question

geraldo accepts the cfo position at efg, his firm's audit client. which will be required under the sec independence rules when he begins his new job?

Answer 1

When accepting the CFO position at EFG, Geraldo will be required to comply with the SEC independence rules. These rules include avoiding direct financial interests and maintaining independence in appearance and fact.

Step-by-step explanation:

When Geraldo accepts the CFO position at EFG, his firm's audit client, he will be required to adhere to the SEC independence rules. Under these rules, Geraldo will be prohibited from having a direct financial interest in EFG or any of its affiliates. He will also be required to maintain independence in both appearance and fact, meaning he cannot engage in any activities that could compromise his objectivity or impartiality.

For example, Geraldo would not be allowed to serve on EFG's board of directors or hold a position where he can exercise control or influence over the financial reporting process of the company. He must also avoid any conflicts of interest that may arise from his position at EFG.

Overall, the SEC independence rules aim to ensure that auditors and professionals in key financial positions maintain their objectivity and independence, which are essential for accurate financial reporting and maintaining public trust in financial markets.

Answer 2

Under SEC independence rules, if Geraldo accepts a CFO position at EFG, a 'cooling-off' period will be required, his previous audit work may need to be reviewed, and the audit firm must reassess its independence to maintain the integrity of the financial reporting process.

Step-by-step explanation:

When Geraldo accepts the CFO position at EFG, his firm's audit client, under the SEC independence rules, certain requirements will have to be met to maintain the integrity of the financial reporting process. First and foremost, the audit firm will have to evaluate its independence with respect to the client. This is because an auditor must remain independent in both fact and appearance when performing audit services.

Specifically, there will likely be a 'cooling-off' period required before the former auditor can take a key position at the client company. During this period, the auditor is not allowed to participate in any audits of the company to ensure independence is not compromised. Additionally, all work Geraldo performed on EFG's audit within the preceding audit period may need to be reviewed or re-performed by another auditor to ensure the integrity of the audit opinion. The firm may also need to assess and possibly modify its team, processes, or client relationship to fully comply with the SEC's rules and maintain public trust in the audit process.