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Unformatted text preview: has been issued, the existence and
significance of any threat shall be evaluated and safeguards applied when necessary to
eliminate the threat or reduce it to an acceptable level. An example of such a safeguard is
having an additional professional accountant who did not take part in the audit engagement
202 provide advice or review the work performed. The firm shall determine whether the overdue
fees might be regarded as being equivalent to a loan to the client and whether, because of the
significance of the overdue fees, it is appropriate for the firm to be reappointed or continue the
290.224 Contingent fees are fees calculated on a predetermined basis relating to the outcome 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 if established by a court or other public authority.
290.225 A contingent fee charged directly or indirectly, for example through an intermediary, by a firm
in respect of an audit engagement creates a selfinterest threat that is so significant that no
safeguards could reduce the threat to an acceptable level. Accordingly, a firm shall not enter
into any such fee arrangement.
290.226 A contingent fee charged directly or indirectly, for example through an intermediary, by a firm
in respect of a non-assurance service provided to an audit client may also create a self-interest
threat. The threat created would be so significant 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 financial statements 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 significant part of the audit and
the fee is material or expected to be material to that firm; or (c) The outcome of the non-assurance service, and therefore the amount of the fee, is
dependent on a future or contemporary judgment related to the audit of a material amount
in the financial statements. Accordingly, such arrangement...
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This document was uploaded on 04/03/2014.
- Spring '14