Revised Code of Ethics in the Phils - 2010

290225 a contingent fee charged directly or

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Unformatted text preview: of the threat is suchthat a post-issuance review would not reduce the threat to an acceptablelevel and, therefore, a pre-issuance review is required. In suchcircumstances a preissuance review shall be performed. Fees―Overdue 290.223 A self-interest threat may be created if fees due from an audit client remainunpaid for a long time, especially if a significant part is not paid before theissue of the audit report for the following year. Generally the firm isexpected to require payment of such fees before such audit report is issued.If fees remain unpaid after the report has been issued, the existence andsignificance of any threat shall be evaluated and safeguards applied whennecessary to eliminate the threat or reduce it to an acceptable level. Anexample of such a safeguard is having an additional professional accountantwho did not take part in the audit engagement provide advice or review thework performed. The firm shall determine whether the overdue fees mightbe regarded as being equivalent to a loan to the client and whether, becauseof the 81 significance of the overdue fees, it is appropriate for the firm to be reappointedor continue the audit engagement. Contingent Fees 290.224 Contingent fees are fees calculated on a predetermined basis relating to theoutcome of a transaction or the result of the services performed by the firm.For the purposes of this section, a fee is not regarded as being contingent ifestablished by a court or other public authority. 290.225 A contingent fee charged directly or indirectly, for example through anintermediary, by a firm in respect of an audit engagement creates a self-interestthreat that is so significant that no safeguards could reduce thethreat to an acceptable level. Accordingly, a firm shall not enter into anysuch fee arrangement. 290.226 A contingent fee charged directly or indirectly, for example through anintermediary, by a firm in respect of a non-assurance service provided to anaudit client may also create a self-interest threat. The threat created would be sosignifica...
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