Chapter 2 - Safeguards in Practice

Question 1

Leadership safeguard related to ethics

Answer 1

A leadership culture in the accounting practice that stresses how important it is for staff to comply with the fundamental ethical principles.

Question 2

Leadership safeguard related to public

Answer 2

A leadership culture that expects all members of staff working on assurance assignments to act in the public interest.

Question 3

Safeguard to ensure quality

Answer 3

Strong quality control procedures which are monitored for all engagements together with a member of senior management being given responsibility for overseeing the adequate functioning of this quality control system

Question 4

Safeguard for compliance with principles

Answer 4

Documented internal policies and procedures requiring compliance with fundamental principles and a disciplinary mechanism to promote this compliance

Question 5

Is it important to update staff with changes to policies?

Answer 5

Yes, it is important to give timely communications with all partners and professional staff and the appropriate training to deal with such changes.

Question 6

What is the safeguard to familiarity threats?

Answer 6

Policies and procedures in place to identify relationships between clients and staff

Question 7

What is the highest percentage one clients fee can be out of the total income?

Answer 7

20%

Question 8

If a fee exceeds the suitable percentage what is the possible threat?

Answer 8

Intimidation

Question 9

Safeguards to providing non assurance services to assurance clients

Answer 9

Using different partners on engagement teams with separate reporting lines to provide non assurance services to an assurance clients

Question 10

Safeguards to encourage staff to communicate

Answer 10

Published policies and procedures to encourage ad empower staff to talk to senior levels with any issue relating to ethic principles.