Purpose – Auditors’ employment with their former audit clients has been an issue of concern to regulators and accounting bodies because of its perceived effect on auditor independence. Little prior research examines this issue and the results are mixed. This paper is motivated by the lack of research on the impact of certified public accountings (CPAs) employment with former audit clients on auditor independence, particularly in the Asia Pacific region in the post-Enron climate.

Design/methodology/approach – This research is the first study of its type in the literature using both qualitative and quantitative analysis. The framework of the study is formed by the identification of gaps in the literature and semi-structured interviews. Two within-subjects independent variables – “auditors of different ranks” (rank factor) and “former auditor’s direct prior professional relationship with the client” – and one between-subject independent variable – “Big 4” CPAs vs non-Big 4 CPAs – are examined. Mixed analysis of variance (ANOVA) are employed to analyze survey responses from 205 “Big 4” and 196 “non-Big 4” auditors.

Findings – The rank factor has a significant influence on the perceptions of auditor independence. Perceived independence is impaired when a senior level professional such as partner or manager joins a former audit client, and revokes an US study conducted in the pre-Enron. Perceived independence is also impaired when the former auditor has a direct prior professional relationship with the former audit client. Results further indicate that when the former manager who has direct prior professional relationship with the client and then joins the audit client, independence is severely impaired.

Originality/value – The results of this paper could help to establish an effective standard that deals with the employment/independence situations in the local auditing environment.