Auditing and Control
Ethical Dilemmas for Auditors
Discussion Paper
May 2006
1
The Institute of Certified Public Accountants in Ireland
Ethical Dilemmas for Auditors
Dilemma One – Non-Audit Services
3
Dilemma Two – Fee Levels
6
Dilemma Three – Ethics Partner
7
Dilemma Four – Long Association with the Audit Client
8
Dilemma Five – Commencement in Practice
9
Dilemma Six – Financial Interest in a Client
10
Dilemma Seven – Business relations with audit clients
11
Dilemma Eight - Policies and Procedures
12
Appendix 1 – Accounting services - dos and don’ts
13
Appendix 2 – Accounting services - examples of threats and safeguards 14 Appendix 3 – Non-audit services – sample audit work paper Appendix 4 – Sample audit planning letter 16 26
Appendix 5 – Long association with audit client, sample audit work paper 29
2
Dilemma One – Non-Audit Services
I provide a complete suite of services to my small corporate clients such as accounting services, tax work and ad hoc projects that they may request me to do. I have heard that there may be a problem with this? What should I do?
Whether or not you can provide these services will depend on the type of client that you have and the type of service that you are providing. You will need to be careful that you review all services to clients to ensure that a threat to your firm’s independence does not exist. The threats that may be created are “self review” and “management” threats. Where non-audit services are provided to your clients your consideration of your independence should be documented on your audit file. Accounting services Unlisted clients You may provide certain accounting services to the client provided safeguards are applied. The accounting services that you can provide should not involve initiating transactions or making management decisions and should be of a mechanical nature. The safeguards should be as follows; Accounting services are provided by staff not
Discussion Paper
May 2006
1
The Institute of Certified Public Accountants in Ireland
Ethical Dilemmas for Auditors
Dilemma One – Non-Audit Services
3
Dilemma Two – Fee Levels
6
Dilemma Three – Ethics Partner
7
Dilemma Four – Long Association with the Audit Client
8
Dilemma Five – Commencement in Practice
9
Dilemma Six – Financial Interest in a Client
10
Dilemma Seven – Business relations with audit clients
11
Dilemma Eight - Policies and Procedures
12
Appendix 1 – Accounting services - dos and don’ts
13
Appendix 2 – Accounting services - examples of threats and safeguards 14 Appendix 3 – Non-audit services – sample audit work paper Appendix 4 – Sample audit planning letter 16 26
Appendix 5 – Long association with audit client, sample audit work paper 29
2
Dilemma One – Non-Audit Services
I provide a complete suite of services to my small corporate clients such as accounting services, tax work and ad hoc projects that they may request me to do. I have heard that there may be a problem with this? What should I do?
Whether or not you can provide these services will depend on the type of client that you have and the type of service that you are providing. You will need to be careful that you review all services to clients to ensure that a threat to your firm’s independence does not exist. The threats that may be created are “self review” and “management” threats. Where non-audit services are provided to your clients your consideration of your independence should be documented on your audit file. Accounting services Unlisted clients You may provide certain accounting services to the client provided safeguards are applied. The accounting services that you can provide should not involve initiating transactions or making management decisions and should be of a mechanical nature. The safeguards should be as follows; Accounting services are provided by staff not