Revised Code of Ethics in the Phils - 2010

290221 a self interest or intimidation threat is also

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Unformatted text preview: n which the firmwill express an opinion;The self-review threat would be so significant that no safeguards couldreduce the threat to an acceptable level, in which case the corporate financeadvice shall not be provided. 290.219 Providing corporate finance services involving promoting, dealing in, orunderwriting an audit client’s shares would create an advocacy or self-reviewthreat that is so significant that no safeguards could reduce the threat to anacceptable level. Accordingly, a firm shall not provide such services to an auditclient. Fees Fees―Relative Size 290.220 When the total fees from an audit client represent a large proportion of the totalfees of the firm expressing the audit opinion, the dependence on that client andconcern about losing the client creates a self-interest or intimidation threat. Thesignificance of the threat will depend on factors such as: • The operating structure of the firm; • Whether the firm is well established or new; and • The significance of the client qualitatively and/or quantitatively tothe firm. The significance of the threat shall be evaluated and safeguards appliedwhen necessary to eliminate the threat or reduce it to an acceptable level.Examples of such safeguards include: • Reducing the dependency on the client; • External quality control reviews; or • Consulting a third party, such as a professional regulatory body or aprofessional accountant, on key audit judgments. 290.221 A self-interest or intimidation threat is also created when the fees generatedfrom an audit client represent a large proportion of the revenue from anindividual partner’s clients or a large proportion of the revenue of anindividual office of the firm. The significance of the threat will depend uponfactors such as: SECTION 290 • The significance of the client qualitatively and/or quantitatively tothe partner or office; and • The extent to which the remuneration of the partner, or the partnersin the office, is dependent upon the fees generated from the client. The significance of the threat shall be evaluated and safeguards appliedwhen necessary to eliminate the threat or reduce it to an acceptable level.Examples of such safeguards include: • Reducing the dependency on the audit client; 80 • Having a professional accountant review the work or otherwiseadvise as necessary; or • Regular independent internal or external quality reviews of theengagement. • Audit Clients that are Public Interest Entities 290.22...
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