Section 5510: Financial Interests

Section 5510: Financial Interests · Complied AI

(b)

(i)

If the interest is received by an individual who is not a sustainability assurance 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.

Financial Interests – Other Circumstances

Immediate Family

5510.10 A1 A self-interest, familiarity, or intimidation threat might be created if a sustainability assurance 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 sustainability assurance client is also known to have a financial interest in that entity. 5510.10 A2 Factors that are relevant in evaluating the level of such threats include: • The role of the individual on the sustainability assurance 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. 5510.10 A3 An example of an action that might eliminate such a self- interest, familiarity, or intimidation threat is removing the sustainability assurance team member with the financial interest from the sustainability assurance team. 5510.10 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 sustainability assurance team member.

Close Family

5510.10 A5 A self-interest threat might be created if a sustainability assurance team member knows that a close family member has a direct financial interest or a material indirect financial interest in the sustainability assurance client. 5510.10 A6 Factors that are relevant in evaluating the level of such a threat include: • The nature of the relationship between the sustainability assurance 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. 5510.10 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 sustainability assurance team. 5510.10 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 sustainability assurance team member.

Other Individuals

5510.10 A9 A self-interest threat might be created if a sustainability assurance team member knows that a financial interest in the sustainability assurance client is held by individuals such as: • Leaders and professional employees of the firm or network firm, apart from those who are specifically not permitted to hold such financial interests by paragraph R5510.4, or their immediate family members. • Individuals with a close personal relationship with a sustainability assurance team member. 5510.10 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 sustainability assurance team member. 5510.10 A11 An example of an action that might eliminate such a self- interest threat is removing the sustainability assurance team member with the personal relationship from the sustainability assurance team. 5510.10 A12 Examples of actions that might be safeguards to address such a self-interest threat include: • Excluding the sustainability assurance team member from any significant decision-making concerning the sustainability assurance engagement. • Having an appropriate reviewer review the work of the sustainability assurance team member.

Retirement Benefit Plan of a Firm or Network Firm

5510.10 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 a sustainability assurance client.