Exposure Draft - ACRA

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CODE OF PROFESSIONAL CONDUCT AND ETHICS FOR PUBLIC ACCOUNTANTS 200.5 Examples of circumstances that may create self-review threats include, but are not limited to: (a) The discovery of a significant error during a re-evaluation of the work of the public accountant. (b) Reporting on the operation of financial systems after being involved in their design or implementation. (c) Having prepared the original data used to generate records that are the subject matter of the engagement. (d) A member of the assurance team being, or having recently been, a director or officer * of that client. (e) A member of the assurance team being, or having recently been, employed by the client in a position to exert direct and significant influence over the subject matter of the engagement. (f) Performing a service for a client that directly affects the subject matter of the assurance engagement. 200.6 Examples of circumstances that may create advocacy threats include, but are not limited to: (a) Promoting shares in a listed entity * when that entity is a financial statement audit client. (b) Acting as an advocate on behalf of an assurance client in litigation or disputes with third parties. 200.7 Examples of circumstances that may create familiarity threats include, but are not limited to: (a) A member of the engagement team having a close or immediate family relationship with a director or officer of the client. (b) A member of the engagement team having a close or immediate family relationship with an employee of the client who is in a position to exert direct and significant influence over the subject matter of the engagement. (c) A former partner of the firm being a director or officer of the client or an employee in a position to exert direct and significant influence over the subject matter of the engagement. (d) Accepting gifts or preferential treatment from a client, unless the value is clearly insignificant. (e) Long association of senior personnel with the assurance client. 200.8 Examples of circumstances that may create intimidation threats include, but are not limited to: See Definitions. 17
CODE OF PROFESSIONAL CONDUCT AND ETHICS FOR PUBLIC ACCOUNTANTS (a) Being threatened with dismissal or replacement in relation to a client engagement. (b) Being threatened with litigation. (c) Being pressured to reduce inappropriately the extent of work performed in order to reduce fees. 200.9 A public accountant may also find that specific circumstances give rise to unique threats to compliance with one or more of the fundamental principles. Such unique threats obviously cannot be categorized. In either professional or business relationships, a public accountant should always be on the alert for such circumstances and threats. 200.10 Safeguards that may eliminate or reduce threats to an acceptable level fall into two broad categories: (a) (b) Safeguards created by the profession, legislation or regulation; and Safeguards in the work environment. Examples of safeguards created by the profession, legislation or regulation are described in paragraph 100.12 of Part A of this Code. 200.11 In the work environment, the relevant safeguards will vary depending on the circumstances. Work environment safeguards comprise firm-wide safeguards and engagement specific safeguards. A public accountant should exercise judgment to determine how to best deal with an identified threat. In exercising this judgment a public accountant should consider what a reasonable and informed third party, having knowledge of all relevant information, including the significance of the threat and the safeguards applied, would reasonably conclude to be acceptable. This consideration will be affected by matters such as the significance of the threat, the nature of the engagement and the structure of the firm. 200.12 Firm-wide safeguards in the work environment may include: (a) Leadership of the firm that stresses the importance of compliance with the fundamental principles. (b) Leadership of the firm that establishes the expectation that members of an assurance team will act in the public interest. (c) Policies and procedures to implement and monitor quality control of engagements. (d) Documented policies regarding the identification of threats to compliance with the fundamental principles, the evaluation of the significance of these threats and the identification and the application of safeguards to eliminate or reduce the threats, other than those that are clearly insignificant, to an acceptable level. (e) For firms that perform assurance engagements, documented independence policies regarding the identification of threats to independence, the evaluation of the significance of these threats and the evaluation and application of safeguards to See Definitions. 18
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Exposure Draft - ACRA

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