Revised Code of Ethics in the Phils - 2010

Such services do not generally create threats to

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Unformatted text preview: nancial statements from one financial reporting framework to another (for example, to comply with group accounting policies or to transition to a different financial reporting framework, such as International Financial Reporting Standards. Such services do not generally create threats to independence, provided the firm does not assume a management responsibility for the client.” 12. Sec. 290.199 Internal Audit Services Sec. 290.199 of the IESBA Code provides: “When a firm uses the work of an internal audit function, ISAs require the performance of procedures to evaluate the adequacy of that work. When a firm accepts an engagement to provide internal audit services to an audit client, and the results of those services will be used in conducting the external audit, a self-review threat is created because of the possibility that the audit team will use the results of the internal audit service without appropriately evaluating those results or exercising the same level of professional skepticism 10 as would exercised when the internal audit work is performed by individuals who are not members of the firm. The significance of the threat will depend on factors such as: - The materiality of the related financial statement amounts; - The risk of misstatement of the assertions related to those financial statement amounts; and - The degree of reliance that will be placed on the internal audit service. “The significance of the threat shall be evaluated and safeguards applied when necessary to eliminate the threat or reduce it to an acceptable level. An example of such a safeguard is using professionals who are not members of the audit team to perform the internal audit service.” The PICPA National Board previously approved the following provisions recommended by the Ethics Committee (FY 2010-2011): “Sec. 290.199 Internal Audit Services “Services involving an extension of the procedures required to conduct a financial statement audit in accordance with Phil Standards on Auditing would not be considered to impair independence with respect to the audit client, pr...
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