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Hi tutor,
There are non audit services that are prohibited from providing if they had material effect on financial statements.E.g valuations are not given to listed entity if they have material effect on financial statements.if they have immaterial effect can the audit firm provide this service?
Thank you
The Code prohibits relationships and activities where no safeguards could reduce the threat to a fundamental principles to an acceptable level – there are relatively few (see page 28 of the notes).
One of the prohibitions is “Providing valuation services to a PIE that are material to the financial statements.” By inference, immaterial would not fall within the prohibition – BUT, “not prohibited” does not mean “perfectly OK”. The threat would still have to be assessed and, if necessary, safeguards applied to reduce the threat to an acceptable level.
In general, you would expect any valuation of something recognised in the financial statements to be material (- IFRS Standards apply only to material items, so why would management bother with the expense of an expert valuing something that is not material?)
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