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Unformatted text preview: ements. The existence and significance ofany threat will depend on factors such as:
• The degree of subjectivity involved in determining the appropriatetreatment for the tax
advice in the financial statements; • The extent to which the outcome of the tax advice will have amaterial effect on the
financial statements; • Whether the effectiveness of the tax advice depends on theaccounting treatment or
presentation in the financial statements andthere is doubt as to the appropriateness of the
accounting treatment orpresentation under the relevant financial reporting framework; • The level of tax expertise of the client’s employees; • The extent to which the advice is supported by tax law or regulation,other precedent or
established practice; and • Whether the tax treatment is supported by a private ruling or hasotherwise been cleared by
the tax authority before the preparation ofthe financial statements. For example, providing tax planning and other tax advisory services wherethe advice is clearly
supported by tax authority or other precedent, byestablished practice or has a basis in tax law
that is likely to prevail does notgenerally create a threat to independence.
290.189 The significance of any threat shall be evaluated and safeguards appliedwhen necessary to
eliminate the threat or reduce it to an acceptable level.Examples of such safeguards include:
• Using professionals who are not members of the audit team toperform the service; • Having a tax professional, who was not involved in providing the taxservice, advise the
audit team on the service and review the financialstatement treatment; • Obtaining advice on the service from an external tax professional; or • Obtaining pre-clearance or advice from the tax authorities. 290.190 Where the effectiveness of the tax advice depends on a particularaccounting treatment or
presentation in the financial statements and:
(a) The audit team has reasonable doubt as to the appropriateness of therelated accounting
treatment or presentation under the relevantfinancial reporting framework; and
71 (b) The outcome or consequences of the tax advice will have a materialeffect on the financial
statements on which the firm will express anopinion; The self-review threat would be so signific...
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This document was uploaded on 04/03/2014.
- Spring '14