Assuming management responsibilities for an assurance client may create threats to independence. The provision of other services may require the assurance firm to assume management responsibilities but an assurance firm must not assume management responsibilities as part of an assurance engagement or for an audit client. – Activities that are routine and administrative, or involve matters that are insignificant, generally are deemed not to be a management responsibility. – Providing advice and recommendations to assist management in discharging its responsibilities is not assuming management responsibilities.please explain above scenerio sir i did not get concept of it
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threats to professional ethics
11y ago#1An auditor helping a client to negotiate a contract with an important custome, actually sitting in on meetings and negotiating, would be taking on management responsibilities, and could make it difficult later when auditing the profit to be recognised in respect of that contract.
Simply suggesting to management that they arrange for stage payments on the contract to help cash flows is not taking on management responsibility.
If you were not the auditor then as other work you can do almost anything you are competent at.
sir if auditor takes management responsibility of client what kind of threats it on objectivity is related to fee or some other threats
11y ago#3Self interest. If the auditor participates in management the auditor will not want to be seen to have made a management error.
Would the scenario also give rise to advocacy threat
11y ago#5Possibly. Advocacy is singing the praises of your client to others eg very positive support for a new issue of shares. If the auditor is acting in a management capacity this could be purely internal.
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