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Unformatted text preview: independent of the entity that measures the reserves and provides an assertion to the
firm and to intended users (paragraph 291.19). That entity is not responsible for the subject matter and so
an evaluation shall be made of any threats the firm has reason to believe are created by
interests/relationships with the party responsible for the subject matter (paragraph 291.19). There are
several parties responsible for the subject matter in this engagement (Companies 1–10). As discussed in
example A1 above, the firm may take into account whether an interest or relationship with a particular
company would create a threat to independence that is not at an acceptable level.
D1 Each company provides the firm with a representation that measures its reserves against the
established criteria for measuring proven reserves. The representation is not available to the
intended users. There are several responsible parties in this engagement (Companies 1–10). When determining whether it
is necessary to apply the independence provisions to all of the companies, the firm may take into account
whether an interest or relationship with a particular company would create a threat to independence that is
not at an acceptable level. This will take into account factors such as:
• 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 291.28). For example, Company 8 accounts for 0.17% of the reserves, therefore a business relationship or interest
with Company 8 would create less of a threat than a similar relationship with Company 6 that accounts
for approximately 37.5% of the reserves. Having determined those companies to which the independence
requirements apply, the assurance team and the firm shall be independent of those responsible parties that
would be considered to be the assurance client (paragraph 291.28).
D2 The firm directly measures the reserves of some of the companies...
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This document was uploaded on 04/03/2014.
- Spring '14