Client the self interest threat created would be so

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: atement audit is not necessarily the office to which that partner is assigned. Accordingly, when the engagement partner is located in a different office from that of the other members of the assurance team, judgment should be used to determine in which office the partner practices in connection with that audit. 290.119 If other partners and managerial employees who provide non-assurance services to the financial statement audit client, except those whose involvement is clearly insignificant, or their immediate family, hold a direct financial interest or a material indirect financial interest in the audit client, the self-interest threat created would be so significant no safeguard could reduce the threat to an acceptable level. Accordingly, such personnel or their immediate family should not hold any such financial interests in such an audit client. 290.120 A financial interest in a financial statement audit client that is held by an immediate family member of: (a) a partner located in the office in which the engagement partner practices in connection with the audit; or (b) a partner or managerial employee who provides non-assurance services to the audit client; is not considered to create an unacceptable threat provided it is received as a result of their employment rights (e.g., pension rights or share options) and, 63 By-Laws (On Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants [Issued January 2007] PART I: BY-LAWS ON PROFESSIONAL ETHICS where necessary, appropriate safeguards are applied to reduce any threat to independence to an acceptable level. 290.121 A self-interest threat may be created if the firm, or the network firm, or a member of the assurance team has an interest in an entity and a financial statement audit client, or a director, officer or controlling owner thereof also has an investment in that entity. Independence is not compromised with respect to the audit client if the respective interests of the firm, the network firm, or member of the assurance team, and the audit client, or director, officer or controlling owner thereof are both immaterial and the audit client cannot exercise significant influence over the entity. If an interest is material, to the firm, the network firm or the audit client, and the audit client can exercise significant influence over the entity, no safeguards are available to reduce the threat to an acceptable level and the firm, or the network firm, should either dispose of the interest or decline the audit engagement. Any member of the assurance team with such a material interest should either: (a) Dispose of the interest; (b) Dispose of a sufficient amount of the interest so that the remaining interest is no longer material; or (c) Withdraw from the audit. Provisions Applicable to Non-Financial Statement Audit Assurance Clients 290.122 If a firm has a direct financial financial statement audit client significant no safeguard could Consequently, disposal of the appropriate to pe...
View Full Document

This document was uploaded on 09/23/2013.

Ask a homework question - tutors are online