Advocacy threats - Representing the client in court or in any dispute where the matter is material to the financial statements.
- Negotiating on the client's behalf for finance.
Where the matter is not material to the financial statements the firm should: - Use professionals who are not members of the audit team to perform the service, or
- Have a professional who was not involved in providing the legal services advise the audit team on the service and review any financial statement treatment.
Intimidation threats - Fee dependency
- Personal relationships
- Audit partner joining the client
- Litigation between the audit firm and client.
If the threat cannot be eliminated or reduced to an acceptable level, the assurance provider must decline or resign from the engagement. Confidentiality Confidential information may be obtained from: - The firm or employing organisation
- Business relationships i.e. current clients
- Prospective client
Members of an assurance team should not disclose any information to anyone outside of the engagement team, whether or not they work for the same firm. s and employers. Confidentiality - Disclosure of confidential information should only be made if:
- (a) Disclosure is permitted by law and is authorised by the client or the employer.
- (b) Disclosure is required by law, for example:
- Production of documents or other provision of evidence in the course of legal proceedings.
- Disclosure to the appropriate public authorities of infringements of the law that come to light.
Confidentiality Permitted or required by law - Fraud or theft including fraudulent financial reporting, falsification or alteration of accounting records or other documents and misappropriation of assets
- Taxation law
- Money laundering
- Insider dealing, market abuse, and bribery
- Health and safety law
- Employment law
- Environmental offences.
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