Financial Reporting and Ethics - The Institute of Chartered ...

FINANCIAL REPORTING AND ETHICSinternal control measures. The threats which occur and discussed under(a) above are ‘self-review’, and ‘self-interest’.(d)(e)(f)(g)(h)Provision of Accounting And Bookkeeping ServicesSuch services include preparing accounts and bank reconciliationstatements. When the professional firm subsequently audits the financialstatements, it creates ‘self-review’ threat.Valuation ServicesThe concept of valuation involves assigning an estimated price or valuein present day terms. It comprises the making of assumptions or futureactions or developments. Undertaking valuation services will give riseto ‘self-review’ threat.Taxation ServicesWhere the idea of providing tax planning and other tax advisory servicesis duly approved by the tax authority or existing law, such a servicemay be rendered. However, a ‘self-review’ threat may arise where thetaxation advice will affect matters to be shown in the financialstatements.Internal Audit ServicesThe provision of internal audit service to an audit client brings about a‘self-review’ threat to the fundamental principle of independence if theaudit firm or professional accountant uses the internal work in theperformance of a subsequent external audit.Information Technology (IT) Systems ServicesServices which may be performed include:(i)Design or implementation of IT systems which are not related tointernal control over financial reporting; and(ii)Design or implementation of IT systems which do not generateinformation which forms a significant part of the accountingrecords or financial statements.However, the services not deemed to create a threat to independence,parts of which are listed above, have the proviso that the audit firm’spersonnel do not assume management responsibility for theirimplementation.(i)Litigation Support ServicesThese may include such activities as acting as an expert witness,computing estimated amounts which could become receivable or196