Document ID: chunk:federal_register_of_legislation:F2021C01259:reg:11:p9
Version: federal_register_of_legislation:F2021C01259
Segment Type: reg
Provision Reference: reg 11 (pt 9/16)
Character Range: 32283–35426

and

(b)                The fact that quality is essential in performing audit engagements.

Relevant Ethical Requirements

Compliance with Relevant Ethical Requirements (Ref: Para. 9)

A4.             [Deleted by the AUASB.  Refer Aus A4.1]

Aus A4.1 The auditor is subject to relevant ethical requirements, including those pertaining to independence, relating to audit engagements as defined in ASA 102.[*]

Definition of "Firm," "Network" and "Network Firm" (Ref: Para. 9‑11)

A5.             [Deleted by the AUASB.  Refer ASA 102]

Independence (Ref: Para. 11)

Aus A5.1 Examples of independence requirements that may be applicable are addressed in the Corporations Act 2001, Part 2M.3 Division 3, and relevant ethical requirements in ASA 102.

Threats to Independence (Ref: Para. 11(d))

A6.             The engagement partner may identify a threat to independence regarding the audit engagement that may not be at an acceptable level.  In that case, as required by paragraph 11(d), the engagement partner reports to the relevant person(s) within the firm to determine the appropriate action, which may include eliminating the circumstance that creates the threat, applying safeguards to reduce the threat to an acceptable level or withdrawing from the audit engagement, where withdrawal is possible under applicable law or regulation.

Aus A6.1 The familiarity threat is particularly relevant in the context of financial report audits of listed entities.  For these audits, relevant ethical requirements[†] and the Corporations Act 2001 specify the partner rotation requirements.

Considerations Specific to Public Sector Entities

A7.             Statutory measures may provide safeguards for the independence of public sector auditors.  However, public sector auditors or audit firms carrying out public sector audits on behalf of the statutory auditor may, depending on the terms of the mandate in a particular jurisdiction, need to adapt their approach in order to promote compliance with the spirit of paragraph 11.  This may include, where the public sector auditor's mandate does not permit withdrawal from the engagement, disclosure through a public report, of circumstances that have arisen that would, if they were in the private sector, lead the auditor to withdraw.

Acceptance and Continuance of Client Relationships and Audit Engagements (Ref: Para. 12)

A8.             ASQC 1 requires the firm to obtain information considered necessary in the circumstances before accepting an engagement with a new client, when deciding whether to continue an existing engagement, and when considering acceptance of a new engagement with an existing client.[5]  Information such as the following assists the engagement partner in determining whether the conclusions reached regarding the acceptance and continuance of client relationships and audit engagements are appropriate:

           * The integrity of the principal owners, key management and those charged with governance of the entity;

           * Whether the engagement team is competent to perform the audit engagement and has the necessary capabilities, including time and