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Unformatted text preview: explains that, in the
majority of assuranceengagements, there is one responsible party and that responsible party is
theassurance client. However, in some assurance engagements there are two ormore responsible
parties. In such circumstances, an evaluation shall bemade of any threats the firm has reason to
believe are created by interestsand relationships between a member of the assurance team, the
firm, anetwork firm and the party responsible for the subject matter. For assurancereports that
include a restriction on use and distribution, the paragraphs areto be read in the context of
paragraphs 291.21 to 291.27.
291.102 Interpretation 2005–01 provides further guidance on applying the independencerequirements
contained in this section to assurance engagements.
291.103 Paragraphs 291.104 to 291.120 contain references to the materiality of afinancial interest, loan,
or guarantee, or the significance of a businessrelationship. For the purpose of determining
whether such an interest ismaterial to an individual, the combined net worth of the individual
and theindividual’s immediate family members may be taken into account. Financial Interests
291.104 Holding a financial interest in an assurance client may create a self-interestthreat. The existence
and significance of any threat created depends on:
(a) The role of the person holding the financial interest,
(b) Whether the financial interest is direct or indirect, and
(c) The materiality of the financial interest.
291.105 Financial interests may be held through an intermediary (for example, acollective investment
vehicle, estate or trust). The determination of whethersuch financial interests are direct or
indirect will depend upon whether thebeneficial owner has control over the investment vehicle
or the ability toinfluence its investment decisions. When control over the investmentvehicle or
the ability to influence investment decisions exists, this Codedefines that financial interest to be
a direct financial interest. Conversely,when the beneficial owner of the financial interest has no
control over theinvestment vehicle or ability to influence its investment decisions, this Code
defines that financial interest to be an indirect financial interest.
291.106 If a member of the assurance team, a member of that individual’s immediatefa...
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This document was uploaded on 04/03/2014.
- Spring '14