FRC Ethics, Long association with engagements Flashcards
Long association with engagements
The length of time partners and senior staff work on a client, to prevent self-interest, self-review, and familiarity threats.
What are appropriate safeguards when threats to independence for partners are identified?
Safeguards may include:
> Rotation of partners.
>Involvement of another partner to review the work.
>Engagement quality review (EQR).
What must be considered if the engagement partner on a non-listed client has served for 10 years?
Either rotate the partner OROROROR
1) apply safeguards
or
2) document and communicate the reasoning with those charged with governance at the client.
How long can the audit engagement partner serve on a listed client before rotation is required?
The audit engagement partner must rotate after 5 years, with no return for 5 years.
Can the audit engagement partner’s service be extended beyond 5 years on a listed client?
Yes, with audit committee approval, the service can be extended to 7 years, but safeguards such as an expanded EQR must be in place. The extension must also be disclosed to shareholders.
What happens if the audit client becomes listed and the engagement partner has already served 4 or more years?
The engagement partner may continue for a maximum of 2 more years after the client becomes listed.
How long can the engagement quality reviewer (EQR) and key partners involved in the audit of a listed client serve before rotation?
They must rotate after 7 years, with no return for 5 years for EQRs and 2 years for key partners involved in the audit
What should be reviewed for other partners or senior staff on a listed client after 7 years?
Safeguards should be reviewed to assess whether independence might be compromised. Paragraphs 3.22/3.23 provide further details on these considerations and safeguards.
