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Unformatted text preview: accepts gifts or hospitality, unless the value is
trivial and inconsequential, the threats created would be so significant that no safeguards could
reduce the threats to an acceptable level. Consequently, a firm or a member of the audit team
shall not accept such gifts or hospitality. Actual or Threatened Litigation
290.231 When litigation takes place, or appears likely, between the firm or a member of the audit team
and the audit client, self-interest and intimidation threats are created. The relationship between
client management and the members of the audit team must be characterized by complete
candor and full disclosure regarding all aspects of a client’s business operations. When the firm
and the client’s management are placed in adversarial positions by actual or threatened
litigation, affecting management’s willingness to make complete disclosures, self-interest and
intimidation threats are created. The significance of the threats created will depend on such
• The materiality of the litigation; and 204 • Whether the litigation relates to a prior audit engagement. The significance of the threats shall be evaluated and safeguards applied when necessary to
eliminate the threats or reduce them to an acceptable level. Examples of such safeguards
• If the litigation involves a member of the audit team, removing that individual from the
audit team; or • Having a professional review the work performed. If such safeguards do not reduce the threats to an acceptable level, the only appropriate action is
to withdraw from, or decline, the audit engagement.
Paragraphs 290.232 to 290.499 are intentionally left blank. SECTION 290 Reports that Include a Restriction on Use and Distribution
290.500 The independence requirements in Section 290 apply to all audit engagements. However, in
certain circumstances involving audit engagements where the report includes a restriction on
use and distribution, and provided the conditions descri...
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This document was uploaded on 04/03/2014.
- Spring '14