Revised Code of Ethics in the Phils - 2010

This will take into account factors such as the

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Unformatted text preview: etermine their reserves (subject matter). There are established criteria todetermine when a reserve may be considered to be proven which the professionalaccountant in public practice determines to be suitable criteria for the engagement. The proven reserves for each company as at December 31, 20X0 were as follows: Proven oil reserves thousand of barrels Company 1 5,200 Company 2 725 Company 3 3,260 Company 4 15,000 Company 5 6,700 Company 6 39,126 Company 7 345 Company 8 175 Company 9 24,135 Company 10 9,635 Total 104,301 The engagement could be structured in differing ways: Assertion-Based Engagements A1 Each company measures its reserves and provides an assertion to the firmand to intended users. A2 An entity other than the companies measures the reserves and provides anassertion to the firm and to intended users. Direct Reporting Engagements D1 Each company measures the reserves and provides the firm with a writtenrepresentation that measures its reserves against the established criteriafor measuring proven reserves. The representation is not available to theintended users. D2 The firm directly measures the reserves of some of the companies. Application of Approach A1 Each company measures its reserves and provides an assertion to the firmand to intended users. 111 There are several responsible parties in this engagement (Companies 1–10). Whendetermining whether it is necessary to apply the independence provisions to all of thecompanies, the firm may take into account whether an interest or relationship with aparticular company would create a threat to independence that is not at an acceptablelevel. This will take into account factors such as: • The materiality of the company’s proven reserves in relation to the totalreserves to be reported on; and • The degree of public interest associated with the engagement (paragraph291.28). For example Company 8 accounts for 0.17% of the total reserves, therefore abusiness relationship or interest with Company 8 would create less of a threat than asimilar relationship with Company 6, which account...
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This document was uploaded on 04/03/2014.

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