BU477 Lecture Notes - Lecture 4: Improper Conduct, Engagement Letter, Chief Executive Officer
Document Summary
Specific prohibition- important (pg 65); study for test. Bu477- week 2, lecture 2: prohibitions serve as an effective means to prevent independence threats. The creation of original or source documents such as cheques and invoices is prohibited: you cannot have a direct compensation (% of sales you were able to (cid:374)egotiate (cid:449)ith the (cid:272)lie(cid:374)t(cid:895) if (cid:455)ou"re a part(cid:374)er. If (cid:455)ou"re a(cid:271)le to add (cid:271)usi(cid:374)ess, you cannot be directly compensated for that work. It"s to li(cid:373)it pote(cid:374)tial i(cid:374)dependence issues: cannot charge a lowball fee just for the sake of just getting the client and rushing through the work to make up for the time. In general, firms cannot provide the following services to their assurance clients: accounting and bookkeeping, valuation services that involve a high level of subjectivity and will have a material effect on the financial statements. In the case of valuation services, if they will be subject to audit procedures, they are prohibited regardless of materiality.
