PART 2: Professional Accountants in Business

PART 3: Professional Accountants in Public Practice

o Applying the conceptual framework- Professional Accountants in Public Practice
o Conflicts of Interest
o Professional appointments
 Client acceptance- referring to a private entity, check the background
 Ex- clients with issues on tax evasion (illegal, not compliant with the
rules and regulations of government) [unlike tax avoidance- legal
lowering of tax]
 Will it affect my integrity
 Engagement acceptance- referring to specific activity, check your competence,
accept the fact that you have your own limitation
 Ex- not all CPAs are knowledgeable in tax
 Change in a professional appointment- you can say no/change if there are
changes
 Ex- if it is out of your scope and capabilities, you can say no (rom
external auditor pedeng consultant na lang)
 If may written agreement na and you suddenly requested for a change,
it’s not acceptable. It’s important to research thoroughly abt the
research engagement
o Second Opinions
 The client can ask another auditor to audit for second opinion when they don’t
like the opinion you gave
 The second auditor has the obligation to contact the previous auditor
with permission of the client
 If the auditor did not give permission- you can still psush
through and investigate
o Fees and other types of remunerations
 Professional fees
 Set a limit- it should not affect the quality of the output
 Retainer- monthly fee
 How it is estimated: professional judgement
 Variability of fees is not allowed: example 2% of loans
 Self-interest threat
 Violates objectivity
 Fee should be determinable amount
 Contingent fees
 Not sure it will be approved
 Not allowed
 a sum of money that a lawyer receives as a fee only if the case is won.
 If the company gets an approval of a certain loan, the auditor will get a
certain percent from that.
 Referral fees or commission
  Ex: you know you can’t do it, but you referred a friend that’s
incompetent since you’d get a commission- there’s a self-interest threat
 In general, a CPA can receive commissions for referring products or
services; a CPA can also accept a referral fee for recommending or
referring a CPA to any person or entity or pay a referral fee to obtain a
client. A commission is deemed as received upon completing the
service.
o Inducements like gifts and hospitality
 Marketing professional services
- you will be marketed in exchange of a good opinion
 Gifts and hospitality
- you should report it to your auditing manager
- provided immaterial
o Custody of assets
 You should not handle tangible assets of the company, unless it is
immaterial
 You should separate your personal assets from company’s assets
o Responding to non-compliance with laws and regulations