Revised Code of Ethics in the Phils - 2010

The audit opinion on the second years financial

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Unformatted text preview: reat will depend on factors such as: • The operating structure of the firm; • Whether the firm is well established or new; and • The significance of the client qualitatively and/or quantitatively to the firm. The significance of the 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: • Reducing the dependency on the client; • External quality control reviews; or • Consulting a third party, such as a professional regulatory body or a professional accountant, on key audit judgments. 290.221 A self-interest or intimidation threat is also created when the fees generated from an audit client represent a large proportion of the revenue from an individual partner’s clients or a large proportion of the revenue of an individual office of the firm. The significance of the threat will depend upon factors such as: SECTION 290 • The significance of the client qualitatively and/or quantitatively to the partner or office; and • The extent to which the remuneration of the partner, or the partners in the office, is dependent upon the fees generated from the client. The significance of the 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: 201 • Reducing the dependency on the audit client; • Having a professional accountant review the work or otherwise advise as necessary; or • Regular independent internal or external quality reviews of the engagement. • Audit Clients that are Public Interest Entities 290.222 Where an audit client is a public interest entity and, for two consecutive years, the total fees from the client and its related entities (subject to the considerations in paragraph 290.27) represent more than 15% of the total fees received by the firm expressing the opinion on the financial statements of the client, the firm shall disclose to those charged with governance of the audit client the fact that the total of such fees represents more than 15% of the total fees received by the firm, and discuss which of the safeguards below it will apply to reduce...
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This document was uploaded on 04/03/2014.

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