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Unformatted text preview: t, self-review or familiarity threats may be created if a member ofthe audit team has
recently served as a director, officer, or employee of the auditclient. This would be the case
when, for example, a member of the audit teamhas to evaluate elements of the financial
statements for which the member of theaudit team had prepared the accounting records while
with the client.
290.144 If, during the period covered by the audit report, a member of the audit teamhad served as a
director or officer of the audit client, or was an employee ina position to exert significant
influence over the preparation of the client’saccounting records or the financial statements on
which the firm willexpress an opinion, the threat created would be so significant that
nosafeguards could reduce the threat to an acceptable level. Consequently,such individuals
shall not be assigned to the audit team.
290.145 Self-interest, self-review or familiarity threats may be created if, before theperiod covered by
the audit report, a member of the audit team had servedas a director or officer of the audit
60 client, or was an employee in a positionto exert significant influence over the preparation of the
client’s accountingrecords or financial statements on which the firm will express an opinion.For
example, such threats would be created if a decision made or workperformed by the individual
in the prior period, while employed by theclient, is to be evaluated in the current period as part
of the current auditengagement. The existence and significance of any threats will depend
onfactors such as:
• The position the individual held with the client; • The length of time since the individual left the client; and • The role of the professional on the audit team. The significance of any threat shall be evaluated and safeguards appliedwhen necessary to
reduce the threat to an acceptable level. An example ofsuch a safeguard is conducting a review
of the work performed by theindividual as a member of the audit team. Serving as a Director or Officer of an Audit Client
290.146 If a partner or employee of...
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- Spring '14