This preview shows page 1. Sign up to view the full content.
Unformatted text preview: Family and personal relationships between a member of the audit team and a director or officer
or certain employees (depending on their role) of the audit client may create self-interest,
familiarity or intimidation threats. The existence and significance of any threats will depend on
a number of factors, including the individual’s responsibilities on the audit team, the role of the
family member or other individual within the client and the closeness of the relationship.
290.128 When an immediate family member of a member of the audit team is:
(a) a director or officer of the audit client; or
(b) an employee in a position to exert significant influence over the preparation of the client’s
accounting records or the financial statements on which the firm will express an opinion,
or was in such a position during any period covered by the engagement or the financial
statements, the threats to independence can only be reduced to an acceptable level by removing
the individual from the audit team. The closeness of the relationship is such that no other
safeguards could reduce the threat to an acceptable level. Accordingly, no individual who has
such a relationship shall be a member of the audit team.
290.129 Threats to independence are created when an immediate family member of a member of the
audit team is an employee in a position to exert significant influence over the client’s financial
position, financial performance or cash flows. The significance of the threats will depend on
factors such as:
• The position held by the immediate family member; and • The role of the professional on the audit team.
55 The significance of the threat shall be evaluated and safeguards applied when necessary to
eliminate the threat or reduce it to an acceptable level. Examples of such safeguards include:
• Removing the individual from the audit team; or • Structuring the responsibilities of the audit team so that the professional does not deal with
matters that are within the responsibility of the immediate family member. 290.130 Threats to independence are created when a close family member of a member of the audit
(a) A director or officer of the audit client; or
(b) An employee i...
View Full Document
- Spring '14