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Unformatted text preview: ned with litigation by the client. • A firm being pressured to reduce inappropriately the extent of work performed in order to
reduce fees. • A professional accountant feeling pressured to agree with the judgment of a client employee
because the employee has more expertise on the matter in question.
• 200.9 An audit client indicating that it will not award a planned non-assurance contract to the firm
if the firm continues to disagree with the client’s accounting treatment for a particular
transaction. A professional accountant being informed by a partner of the firm that a planned promotion
will not occur unless the accountant agrees with an audit client’s inappropriate accounting
treatment. Safeguards that may eliminate or reduce threats to an acceptable level fall into two broad
(a) Safeguards created by the profession, legislation or regulation; and
(b) Safeguards in the work environment.
Examples of safeguards created by the profession, legislation or regulation are described in
paragraph 100.14 of Part A of this Code. 200.10 A professional accountant in public practice shall exercise judgment to determine how best to
deal with threats that are not at an acceptable level, whether by applying safeguards to eliminate
the threat or reduce it to an acceptable level or by terminating or declining the relevant
engagement. In exercising this judgment, a professional accountant in public practice shall
consider whether a reasonable and informed third party, weighing all the specific facts and
circumstances available to the professional accountant at that time, would be likely to conclude
that the threats would be eliminated or reduced to an acceptable level by the application of
safeguards, such that compliance with the fundamental principles is not compromised. This
consideration will be affected by matters such as the significance of the threat, the nature of the
engagement and the structure of the firm.
200.11 In the work environment, the relevant safeguards will vary depending on the circumstances. Work
environment safeguards comprise firm-wide safeg...
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This document was uploaded on 04/03/2014.
- Spring '14