Many firms compile financial statements for clients that they also audit. The IRBA Code of Professional Conduct allows this for non-PIE audit clients, but only if the resulting self-review threat is identified and properly addressed. A common blind spot is who counts as part of the audit team. The definition reaches beyond the engagement team to others who can directly influence the outcome of the engagement. This includes people who recommend the engagement partner’s compensation or who oversee the engagement, up to the firm’s Senior or Managing Partner (CEO or equivalent).
This webinar explains how the Code applies in practice when the compiler and the auditor sit in the same firm. It shows how to assess the threat, which safeguards are realistic, and what to document so that your file stands up to review.
• The self-review threat when a firm compiles and audits the same client (R120.6 and R601.5)
• How the Code defines the audit team, and why a firm’s CEO or Managing Partner may fall within it
• Why compiling the financial statements as a “different person” or “different partner” is not enough on its own
• Who can and cannot compile in firms with a CEO, a flat structure, or a sole practitioner
• Remuneration, oversight and quality management arrangements that can create or reduce the threat
• Safeguards you can apply, including an appropriate reviewer, and how to document the assessment
• Practical scenarios and common mistakes
• Audit partners and directors at audit firms that also perform compilation engagements within the firm OR network firms
• Managing partners, CEOs and quality or ethics leaders at audit firms
• Sole practitioners and small firms with a compilation and audit practice
• Audit managers and senior staff who prepare independence assessments
• Anyone responsible for the firm’s system of quality management and ethics compliance
