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High Percentage of Fees – Self Interest Threat

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AA Exams › High Percentage of Fees – Self Interest Threat

  • This topic has 2 replies, 2 voices, and was last updated 10 years ago by liamcolm.
Viewing 3 posts - 1 through 3 (of 3 total)
  • Author
    Posts
  • November 11, 2014 at 2:56 pm #209133
    liamcolm
    Participant
    • Topics: 24
    • Replies: 23
    • ☆

    Hello,

    I am sitting F8 exam for the second time in December 2014

    When studying for my first sitting of F8 4 years ago, the ethical guidance on fees was that if the fees from a publicly listed client exceeded 5% of overall practice income for a year, then “monitoring procedures” were put in place and if the fees exceeded 10% of overall practice income for a year, then the auditor needed to consider resigning. These benchmarks were 10% and 15% for a non listed audit client…am i correct in saying that this guidance has now been removed from Ethical Standard 4 and replaced by the info in the paragraph below???….

    Now, am i correct in saying that for “public interest entities” there is a 15% threshold based on 2 years practice income with a need for a post/pre issuance review as appropriate……

    Can you please confirm

    Thanks
    Liam

    November 11, 2014 at 3:17 pm #209138
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 10595
    • ☆☆☆☆☆

    You are correct. From the ACCA’s rule book

    290.219
    Where an audit client is a public interest entity and, for two consecutive years,
    the total fees from the client and its related entities (subject to the considerations
    in paragraph 290.27) represent more than 15% of the total fees received by the
    firm expressing the opinion on the financial statements of the client, the firm shall
    disclose to those charged with governance of the audit client the fact that the
    total of such fees represents more than 15% of the total fees received by the firm,
    and discuss which of the safeguards below it will apply to reduce the threat to an
    acceptable level, and apply the selected safeguard:…..etc

    November 11, 2014 at 3:21 pm #209139
    liamcolm
    Participant
    • Topics: 24
    • Replies: 23
    • ☆

    Thanks for prompt reply

    Liam

  • Author
    Posts
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