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Unformatted text preview: ation threat is also created when the fees generatedfrom an assurance
client represent a large proportion of the revenue from anindividual partner’s clients. The
significance of the threat shall be evaluatedand safeguards applied when necessary to eliminate
the threat or reduce it toan acceptable level. An example of such a safeguard is having an
additionalprofessional accountant who was not a member of the assurance teamreview the work
or otherwise advise as necessary.
291.153 A self-interest threat may be created if fees due from an assurance clientremain unpaid for a
long time, especially if a significant part is not paidbefore the issue of the assurance report, if
any, for the following period.Generally the firm is expected to require payment of such fees
before anysuch report is issued. If fees remain unpaid after the report has been issued,the
existence and significance of any threat shall be evaluated andsafeguards applied when
necessary to eliminate the threat or reduce it to anacceptable level. An example of such a
safeguard is having anotherprofessional accountant who did not take part in the assurance
engagementprovide advice or review the work performed. The firm shall determinewhether the
overdue fees might be regarded as being equivalent to a loan tothe client and whether, because
of the significance of the overdue fees, it isappropriate for the firm to be re-appointed or
continue the assuranceengagement.
291.154 Contingent fees are fees calculated on a predetermined basis relating to theoutcome of a
transaction or the result of the services performed by the firm.For the purposes of this section,
fees are not regarded as being contingent ifestablished by a court or other public authority.
291.155 A contingent fee charged directly or indirectly, for example through anintermediary, by a firm
in respect of an assurance engagement creates aself-interest threat that is so significant that no 107 safeguards could reduce thethreat to...
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This document was uploaded on 04/03/2014.
- Spring '14