Revised Code of Ethics in the Phils - 2010

Such an interest shall not be held unless a neither

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Unformatted text preview: ty to control or significantly influence the entity; and • The materiality of the financial interest. • The significance of any threat shall be evaluated and safeguards applied when necessary to eliminate the threat or reduce it to an acceptable level. Examples of such safeguards include: • Removing the member of the audit team with the financial interest from the audit team; or • Having a professional accountant review the work of the member of the audit team. 290.114 The holding by a firm, or a member of the audit team, or a member of that individual’s immediate family, of a direct financial interest or a material indirect financial interest in the audit client as a trustee creates a self-interest threat. Similarly, a self-interest threat is created when: (a) A partner in the office in which the engagement partner practices in connection with the audit; (b) Other partners and managerial employees who provide non-assurance services to the audit client, except those whose involvement is minimal; or (c) Their immediate family members, hold a direct financial interest or a material indirect financial interest in the audit client as trustee. Such an interest shall not be held unless: (a) Neither the trustee, nor an immediate family member of the trustee, nor the firm are beneficiaries of the trust; 51 (b) The interest in the audit client held by the trust is not material to the trust; (c) The trust is not able to exercise significant influence over the audit client; and (d) The trustee, an immediate family member of the trustee, or the firm cannot significantly influence any investment decision involving a financial interest in the audit client. 290.115 Members of the audit team shall determine whether a self-interest threat is created by any known financial interests in the audit client held by other individuals including: (a) Partners and professional employees of the firm, other than those referred to above, or their immediate family members; and (b) Individuals with a close personal relationship with a member of the audit team. Whether these interests create a self-interest threat will depend on factors such as: • The firm’s organizational, operating and reporting structure; and • The nature of the relationship between the individual and the member of the audit team. The significance of any threat shall be evaluated and safeguards applied when necessary to eliminate the threat or reduce it to an acceptable level. Examples of su...
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