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the individual was responsible for maintaining regular contact with the client’s
management or those charged with governance. The significance of any threats created shall be evaluated and safeguards applied when
necessary to eliminate the threats or reduce them to an acceptable level. Examples of such
• Modifying the audit plan; • Assigning individuals to the audit team who have sufficient experience in relation to the
individual who has joined the client; or
58 • Having a professional accountant review the work of the former member of the audit team. 290.137 If a former partner of the firm has previously joined an entity in such a position and the entity
subsequently becomes an audit client of the firm, the significance of any threat to independence
shall be evaluated and safeguards applied when necessary to eliminate the threat or reduce it to
an acceptable level.
290.138 A self-interest threat is created when a member of the audit team participates in the audit
engagement while knowing that the member of the audit team will, or may, join the client
sometime in the future. Firm policies and procedures shall require members of an audit team to
notify the firm when entering employment negotiations with the client. On receiving such
notification, the significance of the threat shall be evaluated and safeguards applied when
necessary to eliminate the threat or reduce it to an acceptable level. Examples of such
• Removing the individual from the audit team; or • A review of any significant judgments made by that individual while on the team. Audit Clients that are Public Interest Entities
290.139 Familiarity or intimidation threats are created when a key audit partner joins the audit client
that is a public interest entity as:
(a) A director or officer of the entity; or (b) An employee in a position to exert significant influence over the preparation of the
clients accounting records or the financial statements on which the firm will express an
opinion. Independence would be deemed to be compromised unless, subsequent to the partner ceasing to
be a key audit partner, the public interest entity had issued audited financial statements
covering a period of not less than twelvemonths and the partner was not a member of the audit
team with respect to the audit of those financial statements.
290.140 An intimidation threat is created when the individual who was the firm’s Senior or Managing
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This document was uploaded on 04/03/2014.
- Spring '14