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Unformatted text preview: a) Those who provide the services are not members of the audit team; 67 (b) The services are provided for only a short period of time and are notexpected to recur;
and (c) The situation is discussed with those charged with governance. Valuation Services
290.175 A valuation comprises the making of assumptions with regard to futuredevelopments, the
application of appropriate methodologies and techniques,and the combination of both to
compute a certain value, or range of values,for an asset, a liability or for a business as a whole.
290.176 Performing valuation services for an audit client may create a self-review threat.The existence
and significance of any threat will depend on factors such as:
• Whether the valuation will have a material effect on the financialstatements. • The extent of the client’s involvement in determining and approvingthe valuation
methodology and other significant matters of judgment. • The availability of established methodologies and professionalguidelines. • For valuations involving standard or established methodologies, thedegree of subjectivity
inherent in the item. • The reliability and extent of the underlying data. • The degree of dependence on future events of a nature that couldcreate significant volatility
inherent in the amounts involved. • The extent and clarity of the disclosures in the financial statements. The significance of any threat created shall be evaluated and safeguardsapplied when necessary
to eliminate the threat or reduce it to an acceptablelevel. Examples of such safeguards include:
• Having a professional who was not involved in providing thevaluation service review the
audit or valuation work performed; or • Making arrangements so that personnel providing such services donot participate in the
audit engagement. 290.177 Certain valuations do not involve a significant degree of subjectivity. Thisis likely the case
where the underlying assumptions are either established bylaw or regulatio...
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This document was uploaded on 04/03/2014.
- Spring '14