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Applying the Conceptual Framework in Professional Accountancy

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Applying the Conceptual Framework in Professional Accountancy

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Questions and Answers

What is one example of an engagement-specific safeguard to address threats?

Not disclosing any referral fees received from clients

Involving another firm to perform part of the engagement work (correct)

Having a family member of the engagement team review the work performed

Using the same partner and engagement team for non-assurance services to an assurance client

Which aspect may lead to changes in the level of threat or conclusions about safeguards effectiveness?

Expansion of the scope of professional services provided

Firm leadership stressing compliance with fundamental principles

Merging or listing of the client (correct)

The audit client being a public interest entity

What is the role of an appropriate reviewer who was not a member of the team in addressing threats?

To provide biased advice based on personal relationships

To review and advise on the work performed to address self-review threat (correct)

To act as a member of the assurance team

To ensure no disclosure of commission arrangements to clients

How might using different partners and engagement teams for non-assurance services help address threats?

It mitigates advocacy or familiarity threats Signup and view all the answers

Which action could help address a self-interest threat?

Not disclosing any referral fees received from clients Signup and view all the answers

What change in facts or circumstances could potentially alter conclusions about safeguards addressing threats?

The involvement of an additional firm in part of the engagement Signup and view all the answers

What is the main purpose of applying the conceptual framework as per the text?

To evaluate threats to compliance Signup and view all the answers

Which category of services offered by professional accountants involves expressing an opinion to enhance user confidence?

Assurance engagements Signup and view all the answers

Why might threats to objectivity be more significant in assurance engagements compared to non-assurance engagements?

Due to the nature of the services offered Signup and view all the answers

What is one reason why threats arising on non-assurance engagements should not be ignored?

They can impact the reputation of the accountant Signup and view all the answers

In which area do professional accountants need to evaluate whether threats are at an acceptable level?

Conditions, policies, and procedures that impact evaluation Signup and view all the answers

Which section of the code applies to all professional accountants in public practice?

Section 300 Signup and view all the answers

Study Notes

Addressing Threats

One example of an engagement-specific safeguard to address threats is modifying the engagement team or personnel.
Changes in facts and circumstances may lead to changes in the level of threat or conclusions about safeguards' effectiveness.

Role of Reviewer

An appropriate reviewer who was not a member of the team can help address threats by providing an independent perspective.

Threat Mitigation Strategies

Using different partners and engagement teams for non-assurance services can help address threats.
Rotating team members or using a different team can help address a self-interest threat.

Threat Evaluation

Professional accountants need to evaluate whether threats are at an acceptable level in the specific engagement or service.

Code of Conduct

Section 290 of the code applies to all professional accountants in public practice.

Conceptual Framework

The main purpose of applying the conceptual framework is to identify, evaluate, and address threats to compliance with the fundamental principles.

Assurance and Non-Assurance Engagements

Threats to objectivity might be more significant in assurance engagements compared to non-assurance engagements because of the higher level of assurance provided.
Threats arising on non-assurance engagements should not be ignored because they can still impact the professional accountant's objectivity and independence.

Services and Opinions

One category of services offered by professional accountants involves expressing an opinion to enhance user confidence, such as assurance services.

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Description

Learn how to identify threats to compliance with fundamental principles, evaluate their significance, and address them using safeguards in professional accountancy. This section focuses on Section 300 of the code, which applies to all professional accountants in public practice.