Auditing Profession Act, 2005 (Act No. 26 of 2005)Board NoticesIndependent Regulatory Board for AuditorsNew Rules Regarding Improper Conduct and Code of Professional Conduct for Registered AuditorsCode of Professional Conduct for Registered AuditorsPart B : Registered Auditors in Public PracticeSection 290 : Independence-Audit and Review EngagementsRecent Service with an Audit Client |
| 290.143 | Self-interest, self-review or familiarity threats may be created if a member of the audit team has recently served as a director, officer, or employee of the audit client. This would be the case when, for example, a member of the audit team has to evaluate elements of the financial statements for which the member of the audit team had prepared the accounting records while with the client. |
| 290.144 | If, during the period covered by the audit report, a member of the audit team had served as a director or officer of the audit client, or was an employee in a position to exert significant influence over the preparation of the client's accounting records or the financial statements on which the firm will express an opinion, the threat created would be so significant that no safeguards could reduce the threat to an acceptable level. Consequently, such individuals shall not be assigned to the audit team. |
| 290.145 | Self-interest, self-review or familiarity threats may be created if, before the period covered by the audit report, a member of the audit team had served as a director or officer of the audit client, or was an employee in a position to exert significant influence over the preparation of the client's accounting records or financial statements on which the firm will express an opinion. For example, such threats would be created if a decision made or work performed by the individual in the prior period, while employed by the client, is to be evaluated in the current period as part of the current audit engagement. The existence and significance of any threats will depend on factors such as: |
| • | The position the individual held with the client; |
| • | The length of time since the individual left the client; and |
| • | The role of the professional on the audit team. |
The significance of any threat shall be evaluated and safeguards applied when necessary to reduce the threat to an acceptable level. An example of such a safeguard is conducting a review of the work performed by the individual as a member of the audit team.