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Is it correct that we can accept all type of service for a non-listed entity provided we use necessary safeguards? of course, after assessing the nature of the request?
So why in the Dec 2016 question 5 answer, where the client requested for the identification and recruitment of a board member, whilst the firm is still non-listed declined?
Couldn’t the partner and any other be withdrawn from every other service henceforth as soon as the client becomes listed to reduce any threat?
If the entity was not about to become listed, does the identification and recruitment become a permissible service (with appropriate safeguard)?
I understand that requests that puts the Firm in managerial decisions should always be declined however.
But here, I’d thought that the Firm is only providing an assessment of candidates and it’s still up to the clients to actually make decisions
See here what it means to be independent https://opentuition.com/topic/management-responsibility/
A client is regarded as a public interest entity (PIE) if it listed or seeking a listing.
Some threats are considered “so significant that no safeguards could reduce
the threat to an acceptable level” – i.e. a prohibition – to recruit a board member would fall into that as another example of management responsibility (as discussed in that post also).Identification is permissable for a non-PIE and even negotiating – but, as you say, not the hiring decision.
For a PIE, the Code says (290.210):
A firm shall NOT provide the following recruiting services to an audit client that is
a PIE with respect to a DIRECTOR or officer of the entity or SENIOR MANAGEMENT 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:
• Searching for or seeking out candidates for such positions; and
• Undertaking reference checks of prospective candidates for such positions.So this certainly precludes making an assessment of candidates – not just the hiring decision.
ACCA’s Code of Ethics and Conduct is section 3 of the Rulebook which can be downloaded here https://www.accaglobal.com/uk/en/about-us/regulation/rulebook.html
Although it looks intimidating it is easily searched for points of detail – I recommend it as a reference.
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