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Unformatted text preview: necessary, to eliminate the threats or reduce them to an acceptable
level. When the professional accountant determines that appropriate safeguards are not available or
cannot be applied to eliminate the threats or reduce them to an acceptable level, the professional
accountant shall eliminate the circumstance or relationship creating the threats or decline or
terminate the audit engagement.
A professional accountant shall use professional judgment in applying this conceptual framework.
290.8 Many different circumstances, or combinations of circumstances, may be relevant in assessing
threats to independence. It is impossible to define every situation that creates threats to
independence and to specify the appropriate action. Therefore, this Code establishes a conceptual
framework that requires firms and members of audit teams to identify, evaluate, and address
threats to independence. The conceptual framework approach assists professional accountants in
practice in complying with the ethical requirements in this Code. It accommodates many
variations in circumstances that create threats to independence and can deter a professional
accountant from concluding that a situation is permitted if it is not specifically prohibited. 290.9 Paragraphs 290.100 and onwards describe how the conceptual framework approach to
independence is to be applied. These paragraphs do not address all the circumstances and
relationships that create or may create threats to independence. 290.10 In deciding whether to accept or continue an engagement, or whether a particular individual may
be a member of the audit team, a firm shall identify and evaluate threats to independence. If the
threats are not at an acceptable level, and the decision is whether to accept an engagement or
include a particular individual on the audit team, the firm shall determine whether safeguards are
available to eliminate the threats or reduce them to an acceptable level. If the decision is whether
to continue an engagement, the firm shall determine whether any existing safeguards will
continue to be effective to eliminat...
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This document was uploaded on 04/03/2014.
- Spring '14