MIPPs independence rules-whole section Flashcards
if the code does not give you an answer you want to apply the___
conceptual framework
safe guards that can be put in place to reduce threats can come from 3 places
profession, legislation, regulation
the attest client
your own firm
threats to independence-4 areas
financial relationships-owning stock in company youre auditing
employment relationships-should not be on client’s board of directors
family relationships-audit client where wife is ceo
consulting relationships- cant provide attest services to a client you provide advisory services to
independence rules must be followed when relationships exist during
the period covered by the f/s
the period of the professional engagement
who must comply with the ten hour rule
partner, partner equivalent, manager who provides more than ten hours of nonattest services to the attest client within any fiscal year (10 hour person)
anyone on attest engagement team
individual who can influence the engagement (manager, partner)
partner or partner equivalent even if not on engagment but still in the office
the firm
an entity who is controlled by someone in the office
What is a network firm
firms that cooperate to enhance their capabilities to provide professional services and share one or more of the following
common brand name
common control
profits or cost
common business strategy
professional resources
common quality control policies and procedures
network firms must comply with independence rules withe respect to clients of other network firms / if the use of the audit or review report for the client is not____
Restricted
if you bring in outside help and they are not independent then they cant do attest work. they can do work of an
Internal auditor though without a problem
work on subsidiaries can affect
independence, if you have stake in the parent. vice versa
if successor auditor’s come to you, you should do a few procedures to make sure you are comfortable with it. not do too much attest work because that would be a
independence violation
alternative dispute resolution
engagement letters may require ADR in lieu of litigation.
its cheaper and less costly
if go into adr with client then it can cause independence issues because both are on different sides
if you have gone a year without getting paid by a client you cannot
sign off on new audit report. you would lack independence.
you can sign off if they went into bankruptcy, because the bankruptcy trustee will get someone to pay you.
