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Unformatted text preview: stence and significance of any threat will depend on factors such
• The degree of subjectivity involved in determining the appropriate treatment for the tax
advice in the financial statements; • The extent to which the outcome of the tax advice will have a material effect on the
financial statements; • Whether the effectiveness of the tax advice depends on the accounting treatment or
presentation in the financial statements and there is doubt as to the appropriateness of the
accounting treatment or presentation under the relevant financial reporting framework; • The level of tax expertise of the client’s employees; • The extent to which the advice is supported by tax law or regulation, other precedent or
established practice; and • Whether the tax treatment is supported by a private ruling or has otherwise been cleared by
the tax authority before the preparation of the financial statements. For example, providing tax planning and other tax advisory services where the advice is clearly
supported by tax authority or other precedent, by established practice or has a basis in tax law
that is likely to prevail does not generally create a threat to independence.
290.189 The significance of any threat shall be evaluated and safeguards applied when necessary to
eliminate the threat or reduce it to an acceptable level. Examples of such safeguards include:
• Using professionals who are not members of the audit team to perform the service; • Having a tax professional, who was not involved in providing the tax service, advise the
audit team on the service and review the financial statement treatment; • Obtaining advice on the service from an external tax professional; or • Obtaining pre-clearance or advice from the tax authorities. 290.190 Where the effectiveness of the tax advice depends on a particular accounting treatment or
presentation in the financial statements and:
(a) The audit team has reasonable doubt as to the appropriateness of the related accounting
treatment or presentation under the relevant financial reporting framework; and (b) The outcome or consequences of the tax advice will have a material effect on the
financial statements on which the firm will express an opinion; 192 The self-review threat would be so significant that no safeguards could reduce the threat to an
acceptable level. Accordingly, a firm shall not provide such tax advice to an audit client.
290.191 In providing tax services to an audit client, a firm may...
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This document was uploaded on 04/03/2014.
- Spring '14