Revised Code of Ethics in the Phils - 2010

82 compensation and evaluation policies 290228 a self

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Unformatted text preview: nt that no safeguards could reduce the threat to an acceptable level if: (a) The fee is charged by the firm expressing the opinion on the financialstatements and the fee is material or expected to be material to that firm; (b) The fee is charged by a network firm that participates in a significantpart of the audit and the fee is material or expected to be material tothat firm; or (c) The outcome of the non-assurance service, and therefore the amountof the fee, is dependent on a future or contemporary judgment relatedto the audit of a material amount in the financial statements.Accordingly, such arrangements shall not be accepted. 290.227 For other contingent fee arrangements charged by a firm for a non-assuranceservice to an audit client, the existence and significance of anythreats will depend on factors such as: • The range of possible fee amounts; • Whether an appropriate authority determines the outcome of thematter upon which the contingent fee will be determined; • The nature of the service; and • The effect of the event or transaction on the financial statements. The significance of any threats shall be evaluated and safeguards appliedwhen necessary to eliminate the threats or reduce them to an acceptablelevel. Examples of such safeguards include: • Having a professional accountant review the relevant audit work orotherwise advise as necessary; or • Using professionals who are not members of the audit team toperform the non-assurance service. 82 Compensation and Evaluation Policies 290.228 A self-interest threat is created when a member of the audit team isevaluated on or compensated for selling non-assurance services to that auditclient. The significance of the threat will depend on: • The proportion of the individual’s compensation or performanceevaluation that is based on the sale of such services; • The role of the individual on the audit team; and • Whether promotion decisions are influenced by the sale of suchservices. The significance of the threat shall be evaluated and, if the thr...
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