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Unformatted text preview: bjective of this section is to assist firms and members of audit teams in applying the
conceptual framework approach described below to achieving and maintaining independence. 290.6 Independence comprises:
(a) Independence of Mind
The state of mind that permits the expression of a conclusion without being affected by
influences that compromise professional judgment, thereby allowing an individual to act with
integrity and exercise objectivity and professional skepticism.
(b) Independence in Appearance
The avoidance of facts and circumstances that are so significant that a reasonable and
informed third party would be likely to conclude, weighing all the specific facts and
circumstances, that a firm’s, or a member of the audit team’s, integrity, objectivity or
professional skepticism has been compromised. 290.7 The conceptual framework approach shall be applied by professional accountants to:
(a) Identify threats to independence;
(b) Evaluate the significance of the threats identified; and
41 (c) Apply safeguards, when necessary, to eliminate the threats or reduce them to an acceptable
When the professional accountant determines that appropriate safeguards are not available or
cannot be applied to eliminate the threats or reduce them to an acceptable level, the professional
accountant shall eliminate the circumstance or relationship creating the threats or decline or
terminate the audit engagement.
A professional accountant shall use professional judgment in applying this conceptual framework.
290.8 Many different circumstances, or combinations of circumstances, may be relevant in assessing
threats to independence. It is impossible to define every situation that creates threats to
independence and to specify the appropriate action. Therefore, this Code establishes a conceptual
framework that requires firms and members of audit teams to identify, evaluate, and address
threats to independence. The conceptual framework approach assists professional accountants in
practice in complying with the ethical requirements in this Code. It accommodates many
variations in circumstances that create threats to independence and can deter a professional
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This document was uploaded on 04/03/2014.
- Spring '14