Revised Code of Ethics in the Phils - 2010

The relationship between client management and the

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Unformatted text preview: s shall not be accepted. 290.227 For other contingent fee arrangements charged by a firm for a nonassurance service to an audit client, the existence and significance of any threats will depend on factors such as: • The range of possible fee amounts; • Whether an appropriate authority determines the outcome of the matter upon which the contingent fee will be determined; • The nature of the service; and • The effect of the event or transaction on the financial statements. The significance of any threats shall be evaluated and safeguards applied when necessary to eliminate the threats or reduce them to an acceptable level. Examples of such safeguards include: • Having a professional accountant review the relevant audit work or otherwise advise as necessary; or 203 • Using professionals who are not members of the audit team to perform the non-assurance service. Compensation and Evaluation Policies 290.228 A self-interest threat is created when a member of the audit team is evaluated on or compensated for selling non-assurance services to that audit client. The significance of the threat will depend on: • The proportion of the individual’s compensation or performance evaluation that is based on the sale of such services; • The role of the individual on the audit team; and • Whether promotion decisions are influenced by the sale of such services. The significance of the threat shall be evaluated and, if the threat is not at an acceptable level, the firm shall either revise the compensation plan or evaluation process for that individual or apply safeguards to eliminate the threat or reduce it to an acceptable level. Examples of such safeguards include: • Removing such members from the audit team; or • Having a professional accountant review the work of the member of the audit team. 290.229 A key audit partner shall not be evaluated on or compensated based on that partner’s success in selling non-assurance services to the partner’s audit client. This is not intended to prohibit normal profit-sharing arrangements between partners of a firm. Gifts and Hospitality 290.230 Accepting gifts or hospitality from an audit client may create self-interest and familiarity threats. If a firm or a member of the audit team...
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This document was uploaded on 04/03/2014.

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