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Unformatted text preview: he length of time the individual has served the
audit client as a key audit partner before the client becomes a PIE shall be taken into
account in determining the timing of the rotation. If the individual has served the audit client
as a key audit partner for five (5) years or less when the client becomes a PIE, the number of
years the individual may continue to serve the client in that capacity before rotating off the
engagement is seven (7) years less the number of years already served. If the individual
has served the audit client as a key audit partner for six (6) or more years when the client
becomes a PIE, the partner may continue to serve in that capacity for a maximum of two (2)
additional years before rotating off the engagement.
[Using the same engagement partner or the same individual responsible for the
engagement quality control review on a financial statement audit over a prolonged period
may create a familiarity threat. This threat is particularly relevant in the context of the
financial statement audit of a listed entity and safeguards should be applied in such
situations to reduce such threat to an acceptable level.
[Accordingly, in respect of the financial statement audit of listed entities:
A. The engagement partner and the individual responsible for the engagement quality control
review should be rotated after serving in either capacity, or a combination thereof, for a
pre-defined period, normally no more than five years; and
B. Such an individual rotating after a pre-defined period should not participate in the audit
engagement until a further period of time, normally two years, has elapsed.]
Because of the current regulations that require a shorter period of service for certain partners as compared
to the seven years as proposed by IESBA Code, the second and third sentences of the paragraph were
modified to read:
“If the individual has two or more years remaining on the maximum service period
when the client becomes a public interest entity, the number o...
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This document was uploaded on 04/03/2014.
- Spring '14