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Mia by Law Fundamental-Objectivity PDF
Mia by Law Fundamental-Objectivity PDF
FAMILIARITY • Member of engmt team having close/immediate family member ENGAGEMENT- • Having PA who was:
Due to a long/close who is a SPECIFIC o Not involved with the non-assur service review the non-assur
relationship with o Director/officer of client, or work performed or otherwise advise as necessary
client/employer: too o Employee of client in position to exert signf influence over o Not a member of assur team review the assur work performed or
sympathetic to their subject matter of engmt otherwise advise as necessary.
rd
interests or too • Director/officer of client in position to exert signf influence over • Consult indp 3 party e.g. committee of indp directors, a pro reg body
accepting of their work subject matter of engmt, recently engmt partner or another PA
• Accept gifts/preferential treatment from client, unless value is • Discuss with those charged with govn of client on:
trivial/inconsequential o Ethical issues
• Senior personnel have long association with assur client o Nature of services provided & extent of fees charged
INTIMIDATION Firm: • Involve another firm to perform/re-perform part of engmt
Deterred from acting • Threatened with dismissal from a client engagement • Rotate senior assur team personnel
objectively because of • Threatened with litigation by the client CLIENT’S SYSTEM • Client req persons other than mgmt to ratify/approve aptmt of a firm
actual/perceived • Pressured to inapprop extent of work performed in order to & PROCEDURES to perform engmt
pressures: attempts to fees • Client has competent employees with experience & seniority to make
exercise undue influence • Threatened: no non-assurance contract given if disagree with managerial decisions
over pro acct client’s inapprop actg treatment • Client implement internal procedures that ensure obj choices in
Pro acct: commissioning non-assur engmt
• Pressured to agree with client employee’s judgment because • Client has corp govn structure: provide approp oversight & comm
expertise on matter in question regarding firm’s services
• Informed by firm partner that planned promotion won’t occur
unless agree with client’s inapprop acctg treatment
PROFESSIONAL APPOINTMENT • FS audit engmt: cannot accept
nomination for engmt without enquiring
EVALUATE existing auditor – whether there is
SAFEGUARDS & OTHER pro/other reason for proposed change
SITUATION SIGNIFICANCE
RELEVANT POINTS of which he should be aware before
OF THREAT
deciding whether to accept aptmt
CLIENT ACCEPTANCE o If there are: request existing auditor
Accepting new client • Threat to integrity: • Obtain knowledge & understanding of to provide details necessary to
rship questionable issues client, its owners, managers & those enable him to come to a decision
related to client e.g. responsible for its govn & business • When sending tender (reply to
o Client involve in activities requests to send it) – state that contact
illegal activities • Secure client’s commitment to improve with existing acct will be req (before
o Dishonesty corp govn practices/internal controls accept engmt) so inq may be made as
o Questionable fin • Review acceptance decisions to whether there are pro/other reasons
rep practices periodically for recurring engmt why aptmt should not be accepted
• If no safeguard: decline to enter into • Ask existing acct to provide known info
client rship on any facts/circums that needs to be
aware of before deciding whether to
ENGAGEMENT ACCEPTANCE accept engmt
• Obtain info from other sources
To provide only those • Self-interest threat to • Acq approp understanding of nature of
• If no safeguard: decline engmt
services that pro competence & client’s business, complexity of ops,
PA in public practice is due care: specific req of engmt and purpose,
Asked to undertake • Threats to pro • Notify existing acct of proposed work,
competent to perform o Engmt team not nature and scope of work to be
work that is competc & due care which would give existing acct
possess/acq performed
complementary or o Lack opportunity to provide relevant info
competencies • Acq knowledge: relevant industries
additional to work of of/incomplete info needed for proper conduct of work
necessary to • Possess/obtain experience with relevt
existing accountant
properly carry out reg/rep req
engmt • Assign sufficient staff with the
Notes:
necessary competencies.
• Whether PA is permitted/required to discuss affairs of a client with a proposed acct depend on:
• Use experts where necessary
o Nature of the engagement
• Agree on realistic time frame to
o Whether client’s permission to do so has been obtained
perform engmt
o Legal/ethical req relating to such comm & disclosure
• Comply with QC policies & procedures
• PA need to obtain the client’s permission (preferably in writing) to initiate discussion with an
designed to provide reasonable assur
existing acct:
that specific engmt are accepted only
o Permission refused: decline appointment
when they can be performed
o Permission obtained: existing acct shall comply with relevant legal & other reg governing such
competently
requests.
• If to rely on advice/work of expert –
- Where the existing accountant provides information, it shall be provided honestly and
determine whether reliance is
unambiguously
warranted, consider:
- If unable to comm with existing acct, proposed acct shall take reasonable steps to obtain
o Reputation rd
info about any possible threats by other means e.g. through inquiries of 3 parties or
o Expertise
background investigt of senior mgmt/those charged with govn of client
o Resources available
o Applicable pro & ethical standards