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Dear sir,
Temporary recruitment of audit partner by client comes under what category of Code of Ethics?
1) Serving as a Director or Officer of an Audit Client
2) Employment With an Audit Client
3) Temporary Personnel Assignments
4) Recent Service with an Audit ClientIts always difficult to classify the given scenario as per above classifications. Classifying can help in writing threats.
Another question is that there is a comment in suggested answer that the seconded “individual would be involved in preparing the financial systems of Gull Co for the flotation” But the Gull client will already have financial system in place as its an old private company. If the individual is just adding share capital, share premium accounts etc in the system then it should not be a significant threat? Please help me to understand if there is other requirements of the system for listed companies.
Thanks,
I am away for a couple of days so this is a brief response – so please ask if you require further clarification.
You may find a partial answer here https://opentuition.com/topic/raven-co-s-d-16
I would say that classification is not as important as recognising the threats arising from the specific scenario – and because the Code does not cover every scenario sometimes there is not exact matching. “Recent service” is past tense – so it can’t be that if it’s still to happen. 6 months is temporary – so most likely to be 3 – whether it is also 1 depends on whether they say the role would be that of a director or officer. Preparing for listing means preparing for a flotation (IPO) so that isn’t just about adding numbers in financial statements (and even if it was, apart from the balances you suggest, the vast majority are subjective and depend on management estimations).
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