Unformatted text preview: e the threats or reduce them to an acceptable level or whether
other safeguards will need to be applied or whether the engagement needs to be terminated.
Whenever new information about a threat to independence comes to the attention of the firm
during the engagement, the firm shall evaluate the significance of the threat in accordance with
the conceptual framework approach.
290.11 Throughout this section, reference is made to the significance of threats to independence. In
evaluating the significance of a threat, qualitative as well as quantitative factors shall be taken
290.12 This section does not, in most cases, prescribe the specific responsibility of individuals within the
firm for actions related to independence because responsibility may differ depending on the size,
structure and organization of a firm. The firm is required by International Standards on Quality
Control (ISQCs) to establish policies and procedures designed to provide it with reasonable
assurance that independence is maintained when required by relevant ethical requirements. In
addition, International Standards on Auditing (ISAs) require the engagement partner to form a
conclusion on compliance with the independence requirements that apply to the engagement. Networks and Network Firms
290.13 If a firm is deemed to be a network firm, the firm shall be independent of the audit clients of the
other firms within the network (unless otherwise stated in this Code). The independence
163 requirements in this section that apply to a network firm apply to any entity, such as a consulting
practice or professional law practice, that meets the definition of a network firm irrespective of
whether the entity itself meets the definition of a firm.
290.14 To enhance their ability to provide professional services, firms frequently form larger structures
with other firms and entities. Whether these larger structures create a network depends on the
particular facts and circumstances and does not depend on whether the firms and entities are
legally separate and distinct. For example, a larger structure may be aimed only at facilitating the
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This document was uploaded on 04/03/2014.
- Spring '14