FRC Ethics, General requirements and guidance Flashcards
What must audit firms establish to ensure integrity, objectivity, and independence?
Policies and procedures that ensure the firm and covered persons act with integrity, objectivity, and independence.
Who is responsible for the firm’s ethical compliance?
The ethics partner, appointed by the audit firm, is responsible for ethical compliance policies and procedures.
What must happen if there is a breach of ethical standards?
The engagement partner and ethics partner must assess the breach.
Can audit firms be involved in a client’s management or decision-making?
No, audit firms and covered persons must not be involved in the client’s management or decision-making.
At what stages must the engagement partner consider threats to objectivity?
At all stages, including:
Acceptance/continuance
Planning
Forming an opinion
Providing non-audit services
Reporting threats
What must the engagement partner do if a threat to objectivity is identified?
Assess the effectiveness of available safeguards and decline or discontinue the engagement if safeguards are not effective.
Which quality standards must audit firms comply with?
ISQM 1 and ISQM 2, which include a requirement for engagement quality reviews for listed companies.
What overall conclusion must the engagement partner reach?
The engagement partner must conclude on the audit firm’s independence.
What must the engagement partner communicate to those charged with governance at the client?
All significant matters that bear upon the auditor’s objectivity.
Where should threats and safeguards be documented?
In the engagement working papers.
Should ethical considerations be limited to one engagement?
No, the auditor must consider ethics across past, current, and potential future engagements.
