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Co has established a pension plan and will be recognizing for the first time deficit on SOFP.The director has asked audit engagement partner to provide a valuation in respect of amount.
what i hv comprehend is asking to reveiw the amunt as its stated that it will be deficit this year.am i right?
what are the professional issues?D245, no, you’re not correct
The company has recognised that they shall have to show a deficit in funding but the company feels that they are themselves incapable of arriving at an appropriate figure. So they have asked the auditors
We are being asked to provide a non-audit service of arriving at a valuation amount. This is not simply a review. In fact, were this merely to be a request to review an item within the financial statements, that would be a silly request because we shall be doing that anyway as an integral element of the audit procedures
Professional issues are primarily competence and independence / objectivity / self review
Materiality should be brought in too because if the deficit is likely going to be immaterial in the context of the financial statements, then we may feel that we could go ahead with the assignment (separate staff from audit staff, second partner involvement, separate engagement letter, confirmation that client is ultimately responsible for the reliability of the financial statements)
But, generally, better to follow Sarbanes Oxley principles and restrict our involvement to just auditing. If we don’t want to continue just as auditors, then resign and set off again as actuaries!
Ok?
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