Revised Code of Ethics in the Phils - 2010

50 accordingly the firm shall not have such an

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Unformatted text preview: ot to compromise independence if the financial interest is received as a result of the immediate family member’s employment rights (for example, through pension or share option plans) and, when necessary, safeguards are applied to eliminate any threat to independence or reduce it to an acceptable level. However, when the immediate family member has or obtains the right to dispose of the financial interest or, in the case of a stock option, the right to exercise the option, the financial interest shall be disposed of or forfeited as soon as practicable. 290.112 A self-interest threat may be created if the firm or a member of the audit team, or a member of that individual’s immediate family, has a financial interest in an entity and an audit client also has a financial interest in that entity. However, independence is deemed not to be compromised if these interests are immaterial and the audit client cannot exercise significant influence over the entity. If such interest is material to any party, and the audit client can exercise significant influence over the other entity, no safeguards could reduce the threat to an acceptable level. 50 Accordingly, the firm shall not have such an interest and any individual with such an interest shall, before becoming a member of the audit team, either: (a) Dispose of the interest; or (b) Dispose of a sufficient amount of the interest so that the remaining interest is no longer material. 290.113 A self-interest, familiarity or intimidation threat may be created if a member of the audit team, or a member of that individual’s immediate family, or the firm, has a financial interest in an entity when a director, officer or controlling owner of the audit client is also known to have a financial interest in that entity. The existence and significance of any threat will depend upon factors such as: • The role of the professional on the audit team; • Whether ownership of the entity is closely or widely held; • Whether the interest gives the investor the abili...
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This document was uploaded on 04/03/2014.

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