Ethical RequirementsEthical Requirements

Ethical Requirements

11 The engagement partner shall consider whether members of the engagement team have complied with relevant ethical requirements relating to audit engagements.

12 Ethical requirements relating to audit engagements ordinarily include the requirements of the applicable code of professional conduct of a professional accounting body[2] that establishes the fundamental principles of professional ethics, which include:

(a) integrity;

(b) objectivity;

(c) professional competence and due care;

(d) confidentiality; and

(e) professional behaviour.

13 Ordinarily, the engagement partner remains alert for evidence of non-compliance with relevant ethical requirements relating to audit engagements. Enquiry and observation regarding ethical matters amongst the engagement partner and other members of the engagement team occur, as necessary, throughout the audit engagement. If matters come to the engagement partner’s attention through the firm’s systems or otherwise that indicate that members of the engagement team have not complied with ethical requirements, ordinarily the partner, in consultation with others in the firm, determines the appropriate action.

14 Ordinarily, the engagement partner and, where appropriate, other members of the engagement team, document issues identified and how they were resolved.

Independence

15 The engagement partner shall form a conclusion on compliance with independence requirements that apply to the audit engagement. In doing so, the engagement partner shall:

(a) obtain relevant information from the firm and, where applicable, network firms, to identify and evaluate circumstances and relationships that create threats to independence;

(b) evaluate information on identified breaches, if any, of the firm’s independence policies and procedures to determine whether they create a threat to independence for the audit engagement;

(c) take appropriate action to eliminate such threats or reduce them to an acceptable level by applying safeguards. The engagement partner shall promptly report to the firm any failure to resolve the matter for appropriate action; and

(d) document conclusions on independence and any relevant discussions with the firm that support these conclusions.

16 The engagement partner may identify a threat to independence regarding the audit engagement that safeguards may not be able to eliminate or reduce to an acceptable level. In that case, the engagement partner ordinarily consults within the firm to determine appropriate action, which may include eliminating the activity or interest that creates the threat, or withdrawing from the audit engagement. Under paragraph 15 (d) of this Auditing Standard, such discussions and conclusions need to be documented.