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Unformatted text preview: les of how this conceptual approach to
independence is to be applied to specific circumstances and relationships. The
examples discuss threats to independence that may be created by specific
circumstances and relationships (paragraphs 290.100 onwards). Professional
judgment is used to determine the appropriate safeguards to eliminate threats
to independence or to reduce them to an acceptable level. In certain examples,
the threats to independence are so significant the only possible actions are to
eliminate the activities or interest creating the threat, or to refuse to accept or
continue the assurance engagement. In other examples, the threat can be
eliminated or reduced to an acceptable level by the application of safeguards.
The examples are not intended to be all-inclusive. 290.39 Certain examples in this section indicate how the framework is to be applied to a
financial statement audit engagement for a listed entity and/or public interest
entity. Where there is no differentiation between listed entities and/or public
interest entities and other entities, the examples that relate to financial
statement audit engagements for listed entities and/or public interest entities
should be considered to apply to all financial statement audit engagements. 290.40 When threats to independence that are not clearly insignificant are identified,
and the firm decides to accept or continue the assurance engagement, the
decision should be documented. The documentation should include a description
of the threats identified and the safeguards applied to eliminate or reduce the
threats to an acceptable level. 55 By-Laws (On Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants
[Issued January 2007] PART I: BY-LAWS ON PROFESSIONAL ETHICS 290.41 The evaluation of the significance of any threats to independence and the
safeguards necessary to reduce any threats to an acceptable level, takes into
account the public interest. Public interest entities are of significant public
interest because, as a result of their business, their size or their corporate
status they have a wide range of stakeholders. Because of the strong public
interest in the financial statements of listed entities and/or public interest
entities, certain paragraphs in this section deal with additional matters that are
relevant to the financial statement audit of listed entities and/or public interest
entities. 290.42 Audit committees can have an important corporate governance role when they
are independent of client management and can assist the Board of Directors in
satisfying themselves that a firm is independent in carrying out its audit role.
There should be regular communications between the firm and the audit
committee (or other governance body if there is no audit committee) of listed
entities regarding relationships and other matters that might, in the firm’s
opinion, reasonably be thought to bear on independence. 290.43 Firms should establish policies and proce...
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This document was uploaded on 09/23/2013.
- Fall '13