Revised Code of Ethics in the Phils - 2010

Whenthe firm and the clients management are placed in

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Unformatted text preview: eat is not at anacceptable level, the firm shall either revise the compensation plan orevaluation process for that individual or apply safeguards to eliminate thethreat or reduce it to an acceptable level. Examples of such safeguardsinclude: • Removing such members from the audit team; or • Having a professional accountant review the work of the member ofthe audit team. 290.229 A key audit partner shall not be evaluated on or compensated based on thatpartner’s success in selling non-assurance services to the partner’s auditclient. This is not intended to prohibit normal profit-sharing arrangementsbetween partners of a firm. Gifts and Hospitality 290.230 Accepting gifts or hospitality from an audit client may create self-interestand familiarity threats. If a firm or a member of the audit team accepts giftsor hospitality, unless the value is trivial and inconsequential, the threatscreated would be so significant that no safeguards could reduce the threatsto an acceptable level. Consequently, a firm or a member of the audit teamshall not accept such gifts or hospitality. 83 Actual or Threatened Litigation 290.231 When litigation takes place, or appears likely, between the firm or amember of the audit team and the audit client, self-interest and intimidationthreats are created. The relationship between client management and themembers of the audit team must be characterized by complete candor andfull disclosure regarding all aspects of a client’s business operations. Whenthe firm and the client’s management are placed in adversarial positions byactual or threatened litigation, affecting management’s willingness to makecomplete disclosures, self-interest and intimidation threats are created. Thesignificance of the threats created will depend on such factors as: • The materiality of the litigation; and • Whether the litigation relates to a prior audit engagement. The significance of the threats shall be evaluated and safeguards appliedwhen necessary to eliminate the threats or reduce them to an accept...
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