Revised Code of Ethics in the Phils - 2010

Tax calculations for the purpose of preparing

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Unformatted text preview: question and the role of the firm in that process; • The complexity of the relevant tax regime and the degree ofjudgment necessary in applying it; • The particular characteristics of the engagement; and • The level of tax expertise of the client’s employees. 290.183 Tax return preparation services involve assisting clients with their taxreporting obligations by drafting and completing information, including theamount of tax due (usually on standardized forms) required to be submittedto the applicable tax authorities. Such services also include advising on thetax return treatment of past transactions and responding on behalf of theaudit client to the tax authorities’ requests for additional information andanalysis (including providing explanations of and technical support for theapproach being taken). Tax return preparation services are generally basedon historical information and principally involve analysis and presentationof such historical information under existing tax law, including precedentsand established practice. Further, the tax returns are subject to whateverreview or 69 approval process the tax authority deems appropriate.Accordingly, providing such services does not generally create a threat toindependence if management takes responsibility for the returns includingany significant judgments made. Tax Calculations for the Purpose of Preparing Accounting Entries Audit clients that are not public interest entities 290.184 Preparing calculations of current and deferred tax liabilities (or assets) foran audit client for the purpose of preparing accounting entries that will besubsequently audited by the firm creates a self-review threat. Thesignificance of the threat will depend on: (a) The complexity of the relevant tax law and regulation and the degreeof judgment necessary in applying them; (b) The level of tax expertise of the client’s personnel; and (c) The materiality of the amounts to the financial statements. Safeguards shall be applied when necessary to eliminate the threat or reduceit to an acceptable level. Examples of such safeguards include: • Using professionals who are not members of the audit team toperform the service; • If the service is performed by a member of the audit team, using apartner or senior staff member with appropria...
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