Section 510: Financial Interests

Section 510: Financial Interests · Complied AI

(b)

(i)

If the interest is received by an individual who is not an audit team member, or by any of that individual’s immediate family, the financial interest shall be disposed of as soon as possible, or enough of an indirect financial interest shall be disposed of so that the remaining interest is no longer material; and

(ii)

Pending the disposal of the financial interest, when necessary the firm shall address the threat created.

The above is subject to additional restrictions under

Companies Act, 2013, where applicable.

Financial Interests – Other Circumstances

Immediate Family

510.10 A1 A self-interest, familiarity, or intimidation threat might be created if an audit team member, or any of that individual’s immediate family, or the firm or a network firm has a financial interest in an entity when a director or officer or controlling owner of the audit client is also known to have a financial interest in that entity. 510.10 A2 Factors that are relevant in evaluating the level of such threats include: • The role of the individual on the audit team. • Whether ownership of the entity is closely or widely held. • Whether the interest allows the investor to control or significantly influence the entity. • The materiality of the financial interest. 510.10 A3 An example of an action that might eliminate such a self- interest, familiarity, or intimidation threat is removing the audit team member with the financial interest from the audit team. 510.10 A4 An example of an action that might be a safeguard to address such a self-interest threat is having an appropriate reviewer review the work of the audit team member.

Close Family

510.10 A5 A self-interest threat might be created if an audit team member knows that a close family member has a direct financial interest or a material indirect financial interest in the audit client. 510.10 A6 Factors that are relevant in evaluating the level of such a threat include:- • The nature of the relationship between the audit team member and the close family member. • Whether the financial interest is direct or indirect. • The materiality of the financial interest to the close family member. 510.10 A7 Examples of actions that might eliminate such a self-interest threat include: • Having the close family member dispose, as soon as practicable, of all of the financial interest or dispose of enough of an indirect financial interest so that the remaining interest is no longer material. • Removing the individual from the audit team. 510.10 A8 An example of an action that might be a safeguard to address such a self-interest threat is having an appropriate reviewer review the work of the audit team member.

The above is subject to additional restrictions under

Companies Act, 2013, where applicable.

Other Individuals

510.10 A9 A self-interest threat might be created if an audit team member knows that a financial interest in the audit client is held by individuals such as: • Partners and professional employees of the firm or network firm, apart from those who are specifically not permitted to hold such financial interests by paragraph R510.4, or their immediate family members. • Individuals with a close personal relationship with an audit team member. 510.10 A10 Factors that are relevant in evaluating the level of such a threat include: • The firm’s organizational, operating and reporting structure. • The nature of the relationship between the individual and the audit team member. 510.10 A11 An example of an action that might eliminate such a self- interest threat is removing the audit team member with the personal relationship from the audit team. 510.10 A12 Examples of actions that might be safeguards to address such a self-interest threat include: • Excluding the audit team member from any significant decision-making concerning the audit engagement. • Having an appropriate reviewer review the work of the audit team member.

Retirement Benefit Plan of a Firm or Network Firm

510.10 A13 A self-interest threat might be created if a retirement benefit plan of a firm or a network firm holds a direct or material indirect financial interest in an audit client.