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Unformatted text preview: s not assuming a management responsibility.
290.165 If a firm were to assume a management responsibility for an audit client, the threats created
would be so significant that no safeguards could reduce the threats to an acceptable level. For
example, deciding which recommendations of the firm to implement will create self-review and
selfinterest threats. Further, assuming a management responsibility creates a familiarity threat
because the firm becomes too closely aligned with the views and interests of management.
Therefore, the firm shall not assume a management responsibility for an audit client.
290.166 To avoid the risk of assuming a management responsibility when providing non-assurance
services to an audit client, the firm shall be satisfied that a member of management is
responsible for making the significant judgments and decisions that are the proper
responsibility of management, evaluating the results of the service and accepting responsibility
for the actions to be taken arising from the results of the service. This reduces the risk of the
firm inadvertently making any significant judgments or decisions on behalf of management.
The risk is further reduced when the firm gives the client the opportunity to make judgments
and decisions based on an objective and transparent analysis and presentation of the issues.
Preparing Accounting Records and Financial Statements
290.167 Management is responsible for the preparation and fair presentation of the financial statements
in accordance with the applicable financial reporting framework. These responsibilities include: 186 • Originating or changing journal entries, or determining the account classifications of
transactions; and • Preparing or changing source documents or originating data, in electronic or other form,
evidencing the occurrence of a transaction (for example, purchase orders, payroll time
records, and customer orders). 290.168 Providing an audit client with accounting and bookkeeping services, such as preparing
accounting records or financial statements, creates a self-review threat when the...
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- Spring '14