Firm such circumstances may create self interest

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Unformatted text preview: Considering the appropriateness or necessity of modifying the assurance plan for the assurance engagement; Quality control review of the assurance engagement. In all cases, all of the following safeguards are necessary to reduce the threat to an acceptable level: (a) The individual concerned is not entitled to any benefits or payments from the firm unless these are made in accordance with fixed predetermined arrangements. In addition, any amount owed to the individual should not be of such significance to threaten the firm’s independence. (b) The individual does not continue to participate or appear to participate in the firm’s business or professional activities. (c) Where a former engagement partner of the firm who was responsible for the assurance engagement, has joined the board of the assurance client, at least two years has elapsed since the date of the assurance report for which such former engagement partner was responsible. 290.145 A self-interest threat is created when a member of the assurance team participates in the assurance engagement while knowing, or having reason to believe, that he or she is to, or may, join the assurance client some time in the future. This threat can be reduced to an acceptable level by the application of all of the following safeguards: 71 By-Laws (On Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants [Issued January 2007] PART I: BY-LAWS ON PROFESSIONAL ETHICS (a) Policies and procedures to require the individual to notify the firm when entering serious employment negotiations with the assurance client. (b) Removal of the individual from the assurance engagement. (c) In addition, consideration should be given to performing an independent review of any significant judgments made by that individual while on the engagement. Recent Service with Assurance Clients 290.146 To have a former officer, director or employee of the assurance client serve as a member of the assurance team may create self-interest, self-review and familiarity threats. This would be particularly true when a member of the assurance team has to report on, for example, subject matter information he or she had prepared or elements of the financial statements he or she had valued while with the assurance client. 290.147 If, during the period covered by the assurance report, a member of the assurance team had served as an officer or director of the assurance client, or had been an employee in a position to exert direct and significant influence over the subject matter information of the assurance engagement, the threat created would be so significant no safeguard could reduce the threat to an acceptable level. Consequently, such individuals should not be assigned to the assurance team. 290.148 (1) If, prior to the period covered by the assurance report, a member of the assurance team had served as an officer or director of the assurance client, or had been an employee in a position to exert direct and signi...
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