Revised Code of Ethics in the Phils - 2010

The firm shall determine whether to discuss the

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Unformatted text preview: example, by way of aninheritance, gift or as a result of a merger, and such interest would not bepermitted to be held under this section, then: (a) If the interest is received by the firm, the financial interest shallbe disposed of immediately, or a sufficient amount of an indirectfinancial interest shall be disposed of so that the remaininginterest is no longer material, or (b) If the interest is received by a member of the assurance team, ora member of that individual’s immediate family, the individualwho received the financial interest shall immediately dispose ofthe financial interest, or dispose of a sufficient amount of anindirect financial interest so that the remaining interest is nolonger material. 291.112 When an inadvertent violation of this section as it relates to a financialinterest in an assurance client occurs, it is deemed not to compromiseindependence if: (a) The firm has established policies and procedures that requireprompt notification to the firm of any breaches resulting from thepurchase, inheritance or other acquisition of a financial interest inthe assurance client; (b) The actions taken in paragraph 291.111(a)–(b) are taken asapplicable; and (c) The firm applies other safeguards when necessary to reduce anyremaining threat to an acceptable level. Examples of suchsafeguards include: • Having a professional accountant review the work of the memberof the assurance team; or • Excluding the individual from any significant decision-makingconcerning the assurance engagement. The firm shall determine whether to discuss the matter with those chargedwith governance. 97 Loans and Guarantees 291.113 A loan, or a guarantee of a loan, to a member of the assurance team, or amember of that individual’s immediate family, or the firm from anassurance client that is a bank or a similar institution, may create a threat toindependence. If the loan or guarantee is not made under normal lendingprocedures, terms and conditions, a self-interest threat would be created thatwould be so significant that no safeguards could reduce the threat to anAcceptable level. Accordingly, neither a member of the assurance team, amember of that individual’s immediate family, nor a firm shall accept sucha loan or guarantee. 291.114 If a loan to a firm from an assurance client that i...
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This document was uploaded on 04/03/2014.

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