A member of the assurance team the firm a network

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Unformatted text preview: each company as at December 31, 20X0 were as follows: Proven oil reserves thousands barrels Company Company Company Company Company Company Company Company Company Company Total 1 2 3 4 5 6 7 8 9 10 5,200 725 3,260 15,000 6,700 39,126 345 175 24,135 9,635 104,301 The engagement could be structured in differing ways: 147 By-Laws (On Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants [Issued January 2007] APPENDICES APPENDIX IV Assertion based engagements A1 Each company measures its reserves and provides an assertion to the firm and to intended users. A2 An entity other than the companies measures the reserves and provides an assertion to the firm and to intended users. Direct reporting engagements D1 Each company measures the reserves and provides the firm with a written representation that measures its reserves against the established criteria for measuring proven reserves. The representation is not available to the intended users. D2 The firm directly measures the reserves of some of the companies. Application of approach A1 Each company measures its reserves and provides an assertion to the firm and to intended users. There are several responsible parties in this engagement (companies 1-10). determining whether it is necessary to apply the independence provisions to all companies, the firm may take into account whether an interest or relationship particular company would create a threat to independence that is other than insignificant. This will take into account factors such as: When of the with a clearly • The materiality of the company’s proven reserves in relation to the total reserves to be reported on; and • The degree of public interest associated with the engagement. (paragraph 290.20). For example Company 8 accounts for 0.16% of the total reserves, therefore a business relationship or interest with the Company 8 would create less of a threat than a similar relationship with Company 6, which accounts for approximately 37.5% of the reserves. 148 By-Laws (On Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants [Issued January 2007] APPENDICES APPENDIX IV Having determined those companies to which the independence requirements apply, the assurance team and the firm are required to be independent of those responsible parties which would be considered to be the assurance client (paragraph 290.20). A2 An entity other than the companies measures the reserves and provides an assertion to the firm and to intended users. The firm would be required to be independent of the entity that measures the reserves and provides an assertion to the firm and to intended users (paragraph 290.17). That entity is not responsible for the subject matter and so consideration should be given to any threats the firm has reason to believe may be created by interests/relationships with the party responsible for the subject matter (paragraph 290.17). There are several parties responsible for subject...
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