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Chapter 2

Examples of safeguards: Examples of safeguards:
Threat
Listed clients Non-listed clients

Self-interest

Owning shares in  Sell the shares  Sell the shares
a client

Fee dependency INT Syllabus: INT Syllabus:

 Total fees from one client  Reduce dependency
should not exceed 15% of
the firm’s fee income  Perform an Engagement
Quality Control Review
 Disclose to TCWG (EQCR)

 Perform an Engagement UK Syllabus:
Quality Control Review
(EQCR)  Total fees from one client
should not exceed 15% of
UK Syllabus: the firm’s fee income.
Where fees are expected
 Total fees from one client to be between 10% and
should not exceed 10% of 15%, this should be
the firm’s fee income. discussed with the ethics
Where fees are expected partner and audit
to be between 5% and committee and
10%, this should be safeguards applied.
discussed with the ethics
partner and audit
committee and
safeguards applied.

 Fees for non-audit
services must be limited
to 70% of the average
audit fee for the last 3
years

Gifts and  Only accept if trivial and  Only accept if trivial
hospitality inconsequential

Employment with  The auditor should notify  The auditor should notify
the client the firm of possible the firm of possible
employment employment

 Remove the person from  Remove the person from
the team the team

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