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Hello Sir,
I saw on question in the Kaplan’s Mock exam for Sep 2018.. question 3d.
What is the ethical and professional issues that may happen if –
Due to theft, the company decide to keep its asset e.g licenses copy, insurance claims … With the audit firm that offers custodian services to many clients?I presume you mean “due to the risk of theft ….”
“Custody of client assets” is prohibited by the Code of Ethics unless permitted by law. It creates a self-interest threat (for example). Where permitted in law, clients’ assets must be kept separately from the firm’s assets. The firm clearly could not sell such assets or use them as security against borrowings.
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