Page 33 - AAA Integrated Workbook STUDENT S18-J19

Code of ethics and conduct

3.3 Assessing the significance of a threat

Factors affecting the significance of the threat include:

 Value – e.g. when considering gifts and hospitality.

 Seniority of staff – e.g. when considering rotation of staff.

 Impact to the audit firm – e.g. when considering fee dependency.

 Materiality to the financial statements – e.g. when considering whether a non-
audit service can be provided

3.4 Safeguards

A safeguard is an action or measure that eliminates a threat, or reduces
it to an acceptable level. If the threat cannot be eliminated or reduced to
an acceptable level, the assurance provider must decline or resign from
the engagement.

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