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.
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
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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This document was uploaded on 04/03/2014.
- Spring '14