Chapter 9 - Ethics S5 Non audit services

Question 1

What is the general approach?

Answer 1

• if considering, tell partner
• would a third party think it impairs objectivity?
• if no safeguards, do not accept
• potential safeguards:
  
  • separate teams
  • engagement quality control review
  • informed management
    info provided to client
    can choose alternative option
    member designation to receive result
• document reasoning/safeguard

Question 2

What are the safeguards for audit related services?

Answer 2

None

Question 3

Internal audit services

Threats and Safeguards for UNLISTED (PRIVATE)

Answer 3

Self review - separate teams, independent partner review.

Management - informed management

DON’T if significant reliance

Question 4

Internal audit services

Threats and Safeguards for LISTED (PUBLIC)

Answer 4

Don’t do it

Question 5

Information Tech (IT)

Threats and Safeguards for UNLISTED (PRIVATE)

Answer 5

Self review - separate teams, independent partner review.

Management - informed management

Question 6

Information Tech (IT)

Threats and Safeguards for LISTED (PUBLIC)

Answer 6

Don’t design/implement systems

Question 7

Valuation

Threats and Safeguards for UNLISTED (PRIVATE)

Answer 7

Self review - separate teams, independent partner review.

Management - informed management

DON’T if material and subjective

Question 8

Valuation

Threats and Safeguards for LISTED (PUBLIC)

Answer 8

DON’T if material

Question 9

Tax

Threats and Safeguards for UNLISTED (PRIVATE)

Answer 9

Self review - separate teams, independent partner review AND independent tax partner

Management - informed management

Self interest - contingent fees not allowed

Advocacy - don’t act in tribunal/case

DON’T if doubt with accounting treatment/only do technical mechanical nature

Question 10

Tax

Threats and Safeguards for LISTED (PUBLIC)

Answer 10

Do not if material calculation

Question 11

Litigation

Threats and Safeguards for UNLISTED (PRIVATE)

Answer 11

Self review - do not if material outcome

Advocacy - do not if material

Question 12

Litigation

Threats and Safeguards for LISTED (PUBLIC)

Answer 12

do not if material

Question 13

Recruitment

Threats and Safeguards for UNLISTED (PRIVATE)

Answer 13

Management/Familiarity - do not if have to take responsibility

do not advice about £ salaries of directors/key management

Question 14

Recruitment

Threats and Safeguards for LISTED (PUBLIC)

Answer 14

Don’t key management position

Question 15

Corporate finance service

Threats and Safeguards for UNLISTED (PRIVATE)

Answer 15

Self review - separate teams, independent partner review AND independent corporate finance partner

Management - informed management

Advoacy - do not deal/promote shares

Question 16

Corporate finance service

Threats and Safeguards for LISTED (PUBLIC)

Answer 16

do not deal/promote shares

no financing, investment strategy

Question 17

Transaction related service (Due diligence)

Threats and Safeguards for UNLISTED (PRIVATE)

Answer 17

Self review - separate teams, independent partner review AND independent transactions partner

Management - informed management

Question 18

Transaction related service

Threats and Safeguards for LISTED (PUBLIC)

Answer 18

no financing, structure, investment strategy

Question 19

Restruction services

Threats and Safeguards for UNLISTED (PRIVATE)

Answer 19

Self review - if affects going concern

Management - informed management

Question 20

Restruction services

Threats and Safeguards for LISTED (PUBLIC)

Answer 20

no financing, no structure, investment strategy

Question 21

Accounting services

Threats and Safeguards for UNLISTED (PRIVATE)

Answer 21

Self review - separate teams, independent partner review AND accounting work reviewed

Management - informed management (technical mature only)

Question 22

Accounting services

Threats and Safeguards for LISTED (PUBLIC)

Answer 22

No bookkeeping/preparing fs/payroll