Revised Code of Ethics in the Phils - 2010

290119 if a loan to a firm from an audit client that

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Unformatted text preview: isition of a financial interest in the audit client; (b) The actions in paragraph 290.116 (a)–(c) are taken as applicable; and (c) The firm applies other safeguards when necessary to reduce any remaining threat to an acceptable level. Examples of such safeguards include: • Having a professional accountant review the work of the member of the audit team; or • Excluding the individual from any significant decision-making concerning the audit engagement. The firm shall determine whether to discuss the matter with those charged with governance. Loans and Guarantees 290.118 A loan, or a guarantee of a loan, to a member of the audit team, or a member of that individual’s immediate family, or the firm from an audit client that is a bank or a similar institution may create a threat to independence. If the loan or guarantee is not made under normal lending procedures, terms and conditions, a self-interest threat would be created that would be so significant that no safeguards could reduce the threat to an acceptable level. Accordingly, neither a member of the audit team, a member of that individual’s immediate family, nor a firm shall accept such a loan or guarantee. 290.119 If a loan to a firm from an audit client that is a bank or similar institution is made under normal lending procedures, terms and conditions and it is material to the audit client or firm receiving the loan, it may be possible to apply safeguards to reduce the self-interest threat to an acceptable level. An example of such a safeguard is having the work reviewed by a professional accountant from a network firm that is neither involved with the audit nor received the loan. 290.120 A loan, or a guarantee of a loan, from an assurance audit client that is a bank or a similar institution to a member of the assurance audit team, or a member of that individual’s immediate family, does not create a threat to independence, if the loan or guarantee is made under normal lending procedures, terms and conditions. Examples of such loans include [home mortgages, bank over drafts, car loans and] credit card balances which are normally available to other credit card holders and fully secured car loans and housing loans which are not past due. 290.121 If the firm or a member of the aud...
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