Revised Code of Ethics in the Phils - 2010

Audit clients that are public interest entities

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Unformatted text preview: firm subsequently audits the financial statements. 290.169 The audit process, however, necessitates dialogue between the firm and management of the audit client, which may involve: • The application of accounting standards or policies and financial statement disclosure requirements; • The appropriateness of financial and accounting control and the methods used in determining the stated amounts of assets and liabilities; or • Proposing adjusting journal entries. These activities are considered to be a normal part of the audit process and do not, generally, create threats to independence. 290.170 Similarly, the client may request technical assistance from the firm on matters such as resolving account reconciliation problems or analyzing and accumulating information for regulatory reporting. In addition, the client may request technical advice on accounting issues such as the conversion of existing financial statements from one financial reporting framework to another (for example, to comply with group accounting policies or to transition to a different financial reporting framework such as International Financial Reporting Standards). Such services do not, generally, create threats to independence provided the firm does not assume a management responsibility for the client. Audit clients that are not public interest entities 290.171 The firm may provide services related to the preparation of accounting records and financial statements to an audit client that is not a public interest entity where the services are of a routine or mechanical nature, so long as any self-review threat created is reduced to an acceptable level. Examples of such services include: • Providing payroll services based on client-originated data; • Recording transactions for which the client has determined or approved the appropriate account classification; • Posting transactions coded by the client to the general ledger; • Posting client-approved entries to the trial balance; and • Preparing financial statements based on information in the trial balance. 187 In all...
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This document was uploaded on 04/03/2014.

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