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Litigation that would likely impair independence:
- If the client alleges audit deficiencies and takes or threatens legal action
- If you take legal action against the client for fraud or deceit
Litigation that would not impair independence
- If both:
- Threatened legal action does not relate to the performance of the attest engagement
- Amount involved is not material to you or the client
Indemnification - Independence is not impaired
Clause in the engagement indicating that the client would release you from liability and costs resulting management knowingly misrepresenting
Indemnification - independence is impaired
Client asks you to agree to indemnify them for costs related to legal action that arises directly/indirectly from client acts
Cannot have a contingent fee if you perform any of these services:
- Audit/review of financial statements
- Compilation of a financial statement when you don't disclose a lack of independence
- Examination of prospective financial statements
- No tax returns or tax refunds
What is a commission?
A fee you receive for recommending someone's products/services
If you're in public practice and performing attest services what may you not do for a commission?
- Recommend someone's products/services
- Recommend a client's products/services
- Perform services for your client
What would you like to do?
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