Overview and Unsolicited Financial Interest Flashcards
MIPPs may not own what in an attest client?
They may not own direct or material indirect interests in an attest client. If a covered member has or is committed to acquire any direct (whether material or not) or any material indirect financial interest, independence is impaired
If a MIPPs interests are both indirect and immaterial…
…independence is not impaired.
Financial interest means?
Ownership in (or an obligation to obtain ownership) in equity, debt or derivatives issued by an entity
Direct financial interest means?
1 Owned directly (even if managed by others)
2 Under one’s control (even if managed by others)
3 Beneficially owned through an investment vehicle, estate, trust or other intermediary
Indirect financial interest means?
1 Does not control the intermediary
2 Does not have the authority to supervise or participate in its investments decisions
Beneficial ownership means?
When an individual or entity is not the record owner but has the right to come or all of the underlying benefits of ownership such as direct voting, dispose of interest and receives it’s economic benefit
Unsolicited financial interest means?
A covered member receives or learns they will receive an unsolicited financial interest in an attest client that is either a direct interest or material indirect interest
What should a covered member do once they receive or learn they will receive an unsolicited financial interest from an audit client?
1 Dispose of the interest as soon as practicable but not later than 30 days
2 Should not participate on the attest engagement team after learning of the interest and before disposing of it
NOTE
These rules about financial interest normally apply only to the covered members however even if a partner or professional employee of a firm is not a covered member, that person cannot own more than 5% of a client’s ownership interests
