CHAP 15: INTERGRITY,OBJECTIVITY,INDEPENDENCE Flashcards
what is underpin for objectivity?
Independence: It is related to and underpins objectivity – it is freedom from situations and relationships that make it probable that a reasonable and informed third party would conclude that objectivity
Phân biệt objectivity and independence
Objectivity is accountant mind
Independence is curcumstance surrounding financial,employment, business and personal relationship ảnh hưởng đến việc assurance provider connect vs khách
Why independence and objectivity matter so much?
1, The expectation of those directly effect, particularly the member of company ( shareholder), audit provide the objective assurance that director kbh provide trên FS
2, Public interest
How to đối mặt với các threat mà đe dọa tới tính objectivity
Đánh giá tính significant, nếu được thì dùng safeguard, nếu safeguard k đủ đảm bảo thì withdraw khỏi engagement
Tại sao auditor nên cân nhắc kĩ lưỡng nếu threat chỉ là slightest
- Clients may lose an auditor who knows their business.
- It denies clients the freedom to be advised by the accountant of their choice.
Acting with intergrity nghĩa là auditor k được associated with information nào
Acting with integrity means not knowingly being associated with
information that:
a) contains a materially false or misleading statement;
b) contains statements or information furnished recklessly; or
c) omits or obscures information required to be included where such
omission or obscurity would be misleading.
Public interest entity
Definition
* A listed entity
* An entity (a) defined by regulation or legislation as a public interest entity or (b) for which the audit is required by regulation or legislation to be conducted in
compliance with the same independence requirements that apply to the audit of listed entities.
Entities may be categorised as either public interest entities or nonpublic interest entities. Generally speaking, stricter standards will
apply to public interest entities because their audits are more
important to the public.
Những dịch vụ mà audit firm k được cung cấp cho public interest entity
1,Dvu lquan đến thuế
-Cbi tax form,payroll tax,custom duties( thuế hải quan)
-Xác định các khoản public subsidies,tax incentives,tax inspection trừ khi là được yêu cầu bởi luật)
-Tính direct,indirect,deferred tax
-cung cấp tax advice
2,Dvu lquan đến management và đưa ra quyết định của audited entity
3,Bookeeping, cbi accounting record on FS
4,Dvu payroll
5,Design internal control,risk management procedure
6,Dvu valuation( actuarial and litigation support services)
7,Legal service
- General counsel(tư vấn chung), negotiating hộ audited entity,acting in advocacy để giải quyết litigation hộ
8, Dvu internal audit
9,Dvu financing,capital structure and allocation,investment strategy
10,promoting,dealing,
underwriting shares hộ audited entity
11,Human resources service
-Giúp audited entity quản lý, tìm ứng viên,tuyển dụng ứng viên các vtri lquan đến accounting record và lập FS
-Structuring entity design và cost control
12 nguyên nhân dẫn đến self-interest threat
1,financial interest
2,close business relationship
3,employment with assurance client
4,partner on client board
5,family and personal relationships
6,gift and hospitality
7,loans and guarantees
8,overdue fee
9,percentage or contigent fee
10,high percentage of fee
11,lowballing
12,loan staff assignment
Financial interest là j? Ai là người k được own financial interest?
- Financial interest là khi người đó được hưởng các direct hoặc indirect financial interest của cty client như interest về equity,security,debebture,loans,các investment vehicle,estate mà qua đó người sở hữu có thể có quyền ảnh hưởng đến các quyết định đầu tư hoặc k
- Người k được owm financial interest
- The assurance firm
- Any partner in the assurance firm
- Any person in a position to influence the conduct and outcome of the
engagement - An immediate family member of such a person
Các safeguard của financial interest để ngăn chặn self interest threat
- Disposing of the interest
- Removing the individual from the team if required
- Keeping the client’s audit committee informed of the situation
- Using an engagement quality control reviewer to review work carried out if necessary
1 team assurance gồm những ai
1, các thành viên thực hiện engagement
2, những người trong fim có ảnh hưởng trực tiếp đến outcome của engagement(partner)
Assurance firm phải làm j để ktra xem staff có immediate family ở trong client ?
Quality management yêu cầu các staff phải disclose về themselves và immediate family trên cơ sở xây dựng văn hóa tự nguyện
Close business relationship gây ra những threat nào? Ví dụ? Safeguard cho ngnhan này?
- A close business relationship will involve a common commercial
interest.
Threats: - Self-interest threat
- Advocacy threat, or
- Intimidation threat
Ví dụ - operating a joint venture giữa firm và client hoặc giữa firm với director,manager của client
-firm vs client combine sp 2 bên để quảng bá cho nhau
-firm marketing cho sp client hoặc ngược lại
-firm thuê văn phòng client
Safeguard - end the assurance provision or
- terminate the (other) business relationship.
- If an individual member of an assurance team had such an interest, he should be removed from the assurance team.
Business relationship ntn thì client vs firm có thể cùng nhau join mà không gây ra threat?
-The business mà financial interest là immaterial và mqh giữa firm và client là insignificant( vd firm thuê văn phòng ở 1 công ty chuyên cho thuê văn phòng, và diện tích thuê của firm là rất nhỏ)
-Purchasing g&s của client in ordinary course of business on arm length basis với number of transaction ở 1 lượng vừa phải chứ nếu là substantial number transaction thì cần phải có safeguard vì nó đe dọa tính independence r
-Ngoài TH này ra thì tốt nhất là firm k nên tham gia venture nào với client
Employment with assurance client gây ra những threat nào? ví dụ
Dual employment (the same person being employed by both an
assurance firm and a client) is not permitted.
Both situation are a threat independence:
* Assurance team member might be motivated by a desire to impress a
future possible employer (objectivity is therefore affected).
* A former partner turned Finance Director has too much knowledge of
the firm’s systems and procedures.
Threats:
* Self-review threat
* Intimidation threat
* Familiarity threats
Factors affecting the threat to independence:
* The role of individual has taken up at the client
* The extent of his influence on the assurance service previously
* The length of time that has passed between the individual’s connection
with the assurance service and the new role at the client.
Safeguard của employment with client( chỉ áp dụng đối với member of audit team)
- Modifying the assurance strategy
- Ensuring the assurance engagement is assigned to someone of sufficient
experience as compared with the individual who has left - Involving an additional professional accountant not involved with the
engagement to review the work done - Carrying out a quality control review of the engagement
Safeguard của employment with client với TH partner của firm rời sang client
- Significant threat to objectivity if the partner of audit firm accepts a
key management position at a client of the firm
FRC Ethical Standard (section 2): - A partner leaves the firm and is appointed as a director or to a key
management position with an audit client in the previous two years, the firmshould resign as auditors. - The auditors should not reaccept appointment until two years have elapsedsince that partner’s involvement in the audit or the former partner leaves the
audit client, if earlier. - When any other former member of an engagement team joins an audit client
as director/key management within two years of being involved with the
audit, the firm should consider the composition of the audit team.
Những việc firm cần làm khi staff rời sang client
FRC Ethical Standard (section 2) (cont.):
* An individual who has moved from the firm to a client should not be entitled to any benefits or payments from the firm unless these are made in accordance with pre-determined arrangements.( kiểu vd khi ký hợp đồng firm đồng ý cho staff tiền học acca mà chưa học xog staff rời đi thì firm vẫn phải tài trợ nốt tiền ý)
* A firm should have quality control procedures setting out that an individual involved in serious employment negotiations with an audit client should
notify the firm and that this person would then be removed from the
engagement. * Review of the employee’s work on the current and most recent audit should take place vì nhiều khi nó sắp rời đi nên nó làm ẩu.
partner/employee on client board gây ra threat j?
A partner or employee of an assurance firm should not serve on the
board of an assurance client.
Threats: Self – review and/or management threat
It may be acceptable for a partner or an employee of an assurance
firm to perform the role of company secretary for an assurance client,
if the role is essentially administrative
family &personal relationship ảnh hưởng đến independence ntn?
Factors affecting seriously threaten independence such as:
* the individual’s responsibilities on the assurance engagement
* the closeness of the relationship
* the role of the other party at the assurance client
* When an immediate family member of a member of the assurance team is a
director, an officer or an employee of the assurance client in a position to exert
significant influence over the subject matter information of the assurance
engagement, the individual should be removed from the assurance team.
Nếu employee mà k nằm trong assurance team có close famlily hoặc personal relationship with director ,officer,employee của client thì có cần có biện pháp j k
K có biện pháp nào những firm vẫn nên cân nhắc xem có threat đến independence k
Các safeguard của family and personal relationship hi firm inadvertently violate( vô tình vi phạm) rules
- Undertake a quality control review of the assurance engagement
- Discuss the matter with the audit committee of the client
Gifts and hospitality
Unless the value of gifts or hospitality are such that a reasonableand
informed third party, weighing all the specific facts and circumstances,
would consider them trivial and inconsequential, a firm or a member of an assurance team should not accept them
FRC ES (section 4) prohibit to immediate family members or persons able to influence the audit and states that hospitality should not be accepted from an audit client unless it is reasonable in terms of its frequency, nature and cost.
