Clients 290132 1 a close business relationship between

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Unformatted text preview: elationship; (b) Reduce the magnitude of the relationship so that the financial interest is immaterial and the relationship is clearly insignificant; or (c) Refuse to perform the assurance engagement. 66 By-Laws (On Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants [Issued January 2007] PART I: BY-LAWS ON PROFESSIONAL ETHICS (4) Unless any such financial interest is immaterial and the relationship is clearly insignificant to the member of the assurance team, the only appropriate safeguard would be to remove the individual from the assurance team. 290.133 In the case of a financial statement audit client, business relationships involving an interest held by the firm, a network firm or a member of the assurance team or their immediate family in a closely held entity when the audit client or a director or officer of the audit client, or any group thereof, also has an interest in that entity, do not create threats to independence provided: (a) The relationship is clearly insignificant to the firm, the network firm and the audit client; (b) The interest held is immaterial to the investor, or group of investors; and (c) The interest does not give the investor, or group of investors, the ability to control the closely held entity. 290.134 The purchase of goods and services from an assurance client by the firm (or from a financial statement audit client by a network firm) or a member of the assurance team would not generally create a threat to independence providing the transaction is in the normal course of business and on an arm’s length basis. However, such transactions may be of a nature or magnitude so as to create a self-interest threat. If the threat created is other than clearly insignificant, safeguards should be considered and applied as necessary to reduce the threat to an acceptable level. Such safeguards might include: (a) Eliminating or reducing the magnitude of the transaction; (b) Removing the individual from the assurance team; or (c) Discussing the issue with those charged with governance, such as the audit committee. Family and Personal Relationships 290.135 Family and personal relationships between a member of the assurance team and a director, an officer or certain employees, depending on their role, of the assurance client, may create self-interest, familiarity or intimidation threats. It is impracticable to attempt to describe in detail the significance of the threats that such relationships may create. The significance will depend upon a number of factors including the individual’s responsibilities on the assurance engagement, the closeness of the relationship and the role of the family member or other individual within the assurance client. Consequently, there is a wide spectrum of circumstances that will need to be evaluated and safeguards to be applied to reduce the threat to an acceptable level. 67 By-Laws (On Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants...
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This document was uploaded on 09/23/2013.

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