MIPPs introduction and conceptual framework

Question 1

MIPPS

Answer 1

members in public practice

Question 2

conceptual framework-3 steps

need to apply this framework if a problem arises and there isn’t a rule to solve it

Answer 2

identify threats to compliance

evaluate the significance of those threats (see if they can be reduced to an acceptable level)

identify and apply safeguards

Question 3

seven types of threats to objectivity and integrity

Answer 3

adverse interest threats-you and client have different interests and opinions. litigation etc

advocacy threats- advocating for your client. its a problem if its a attest client (supposed to be the watchdog). can be advocate if its and advisory client.

familiarity threats-spouse or relative, friend work for client

management participation-a problem when attest client- member takes on role of management

self interest threats-member has financial interest in client that may be affected by the outcome of a professional services engagement. or reliance of excessive revenue from a single client

self review threat- rely on work of member of own firm its hard to be objective. or auditing own work

undue influence threats- client threatens to fire firm or threaten future business. major shareholder threatens

are the threats that these pose to my objectivity and integrity so great that I cant ratchet down to an acceptable level?

Question 4

three categories of safeguards

Answer 4

1. created by the profession, legislation, or regulation.
   education and training requirement, including cpe
   professional standards and the threat of discipline
   external reviews firm quality control system
   legislation establishing prohibitions and requirements
   for a firm and its professionals.
   competancy and experience requirements for license
   professional resources such as hotlines etc

2.Implemented by the client
(big picture, is this a good client?)
clientele with suitable skills
tone at the top
procedures in place to promote compliance and fin reporting
procedures in place for ethical issues
governance structure such as audit committee
policies in place that bar the entity from hiring a firm to provide services that do not serve public interest or impair independence

3. implemented by your own accounting firm
   firm leadership stresses rule compliance and acting in public interest
   policies and procedures made to implement quality control
   someone from senior management to oversee quality control
   disciplinary mechanism
   rotation of senior personell
   procedures that prevent management from being compensated based on services they sell