Chapter 15 - independence Flashcards
1
Q
Refer to paper notes for scenarios that give rise to reduced indepenance threats and the ethical guidance for them!
- Self interest threats
- Self review threats
- Familiarity threats
- Advocacy threats
- Intimidation threats
- Managment threats
A
2
Q
What steps must we take if involved in an ethical conflict of intrest with managment? <em>(we know they are not being ethical)</em>
A
- Try to resolve matter internally
- Obtain advice from ICEAW
- Seek legal advice
- Consider resignation as a last resort
3
Q
- What does material finance mean?
- What does insurmountable mean?
A
- A substantial amount of money to an individual
- Something that can’t be safeguarded
4
Q
What should happen when a non listed client exceeds….
- 15% of the firms income?
- 10% of the firms fee income?
A
- You cannot act as their auditor
- Discolse to Ethics partner
- Discolse to those charged with governance at the firm
- Implement independant quality control review of audit
5
Q
What should happen when a listed client exceeds…
- 10% of a firms income
- 5% of a firms income
A
- cannot act as their auditor
- Disclose to ethics partner
- Disclose to those charged with governance at the client
- implement indepedant quality control review of audit
- Seek to reduce fees
6
Q
What is lowballing and what are the rules on it?
A
Offering less that other audit firms → can be done as long as the audit complies with ethical standards and the work is not compromised.
7
Q
What is a fee cap for listed clients?
A
Total fees from non audit services must not be more than 70% of the average audit fee of the last 3 years
8
Q
- After how long must a partner of a non listed client change?
- After how long must a partner of a listed client change?
A
- Review after 10 years → either rotate or continie with safegaurds.
- After 5 years → can be extended to 7 with audit commitee aproval with no return for 5 years.
