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Fees, client shld not be misled over the basis used to charge the fees,…
Fees
Contingent fee
- not regarded as being contingent if establish by court / other public authority
- firm :red_cross: charged for an audit engagement
- network firm :red_cross:charged for non-assurance service provided to audit client if:
- fee is material / expected to be material to the firm
- outcome of the non-assurance service, the amt of fee is dependent on future / contemporary judgement related to audit of material amt in FS
Factors in evaluating such threat
- range of possible fee amt
- appropriate authority determine the outcome on contingent fee depends
- disclosure to intended users & basis of remuneration
- nature of service
- effect of event / trans on FS
Safeguard
- appropriate reviewer not take part in non-assurance service review the work performed
- obtain advance written agreement with client on the basis of remuneration
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Relative size
All audit clients
-when represent large proportion of total fees of tht firm, create self-int / intimidation threat
Factors in evaluating such threat
- operating structure of the firm
- firm is well establish / new
- the significance of client qualitatively &/or quantitatively to the firm
Safeguard
- increase client base, to reduce dependency on the audit client
- appropriate reviewer review work performed
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Overdue
- self-int threat created if significant part of fees not paid b4 the audit report for the following yr issued
- seen as a loan
- if not paid for a long time, considered to be re-appointed / continue audit engagement
Safeguard
- obtaining partial payment of overdue fee
- appropriate reviewer not audit team member review the work performed
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