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However, the international ethics rules have fewer definitive prohibitions. Like the AICPA
Code, when there is no definitive prohibition, the following approach is used:
1. Identify threats to independence;
2. Evaluate the significance of the threats identified; and
3. Apply safeguards, when necessary, to eliminate the threats or reduce them to an
acceptable level. If safeguards do not reduce the risk to an acceptable level, the firm should
not accept or continue the engagement, or assign the particular individual to the
engagement team. The firm should document these considerations and the conclusion.
Threats to independence arise from self-interest, self-review, advocacy, familiarity, or
intimidation.
a. Like the AICPA Code of Professional Conduct, the international ethics rules indicate these
types of threats can arise from
Financial interests in the client;
Having certain business relationships with the client;
Serving as a director, officer, or employee of the client; and
Performing certain non-assurance services to the client.
b. Safeguards are of two categories: (1) those created by the profession, legislation,
regulation, and
(2) those implemented by the firm in the work environment. For example, legislation may
prohibit the performance of certain nonassurance services for audit clients. The audit firm
may decide not to assign a particular individual to an audit engagement to mitigate a threat
to independence.
Section 291Independence for Other Assurance Services. These requirements are
similar to those established by the AICPA in the US. They relate to maintaining independence
from the parties making the assertion on which the accountant is providing assurance.
Part CProfessional Accountants in Business
The rules that apply to professional accountants in business related to the following areas;
Potential conflicts
Preparation and reporting on information
Acting with sufficient expertise
Financial interests
Inducements