Revised Code of Ethics in the Phils - 2010

This interpretation focuses on the application issues

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Unformatted text preview: ber of the assurance team and the assurance client, self-interest andintimidation threats are created. The relationship between clientmanagement and the members of the assurance team must be characterizedby complete candor and full disclosure regarding all aspects of a client’sbusiness operations. When the firm and the client’s management are placedin adversarial positions by actual or threatened litigation, affectingmanagement’s willingness to make complete disclosures self-interest andintimidation threats are created. The significance of the threats created willdepend on such factors as: 108 • The materiality of the litigation; and • Whether the litigation relates to a prior assurance engagement. The significance of the threats shall be evaluated and safeguards appliedwhen necessary to eliminate the threats or reduce them to an acceptablelevel. Examples of such safeguards include: • If the litigation involves a member of the assurance team, removingthat individual from the assurance team; or • Having a professional review the work performed. If such safeguards do not reduce the threats to an acceptable level, the onlyappropriate action is to withdraw from, or decline, the assurance engagement. Interpretation 2005–01 (Revised July 2009 to conform to changesresulting from the IESBA’s project to improve the clarity of theCode) Application of Section 291 to Assurance Engagements that are Not FinancialStatement Audit Engagements This interpretation provides guidance on the application of the independencerequirements contained in Section 291 to assurance engagements that are notfinancial statement audit engagements. This interpretation focuses on the application issues that are particular to assuranceengagements that are not financial statement audit engagements. There are othermatters noted in Section 291 that are relevant in the consideration of independencerequirements for all assurance engagements. For example, paragraph 291.3 statesthat an evaluation shall be made of any threats the firm has reason to believe arecreated by a network firm’s interests and relationships. It also states that when theassurance team has reason to believe that a related entity of such an as...
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This document was uploaded on 04/03/2014.

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