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Can auditors not do additional work for the client (e.g prepare financial statements or some type of management task) if the client is a listed company?
In a rules-based jurisdiction this may be prohibited but for the AA exam you need to be able to apply the principles of the Code.
So if there is a self-interest threat to compliance with fundamental principles (for an auditor we are particularly concerned with integrity and objectivity) there are 3 ways to address it – see s.3 of page 22 – “eliminate, apply safeguards or decline”.
Bookkeeping is just one example of a non-audit service that might be requested by an audit client (s.3.6 on page 24) – for a PiE the threat to independence would be so great that this would have to be declined. The same for the preparation of financial statements … (but consider this is really quite hypothetical – would a PiE really not be able to keep its own books/prepare its own accounts? )
When it comes to other services like “tax” and “valuations” a factor to consider is whether it is significant/material to the financial statements – if yes, then don’t accept for a PiE (but for a not-PiE client may be able to do if there are safeguards to reduce the threat to an acceptable level).
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