A period of time during which an accounting/ audit firm has to maintain the rule of independence when a member of its audit engagement team (senior or managing partner) quits his/ her position and commences employment with an auditee (an audit client). This period is usually defined as one year or two (or even more) preceding the date of the commencement of audit procedures. This rule applies to public interest entities (PIEs) or in the case a key audit partner joints the partner’s public interest entity audit client.

In general, an accounting firm and an audit partner are required, by law/ regulations, to refrain, for a number of consecutive financial-years from auditing the entity that the firm/ partner previously audited. After the said period, the firm/ partner would be allowed to engage with that entity as an audit client.

A cooling-off period aims to mitigate any possible self- review threat or objectivity threat that may result from previous decisions made by the auditor during his previous employment (acting as the engagement partner).