Document ID: chunk:federal_register_of_legislation:F2020C00630:reg:25:p19
Version: federal_register_of_legislation:F2020C00630
Segment Type: reg
Provision Reference: reg 25 (pt 19/31)
Character Range: 62107–65377

competence, capabilities, and resources to undertake a new engagement from a new or an existing client involves reviewing the specific requirements of the engagement and the existing partner and staff profiles at all relevant levels, and including whether:

           * Firm personnel have knowledge of relevant industries or subject matters;

           * Firm personnel have experience with relevant regulatory or reporting requirements, or the ability to gain the necessary skills and knowledge effectively;

           * The firm has sufficient personnel with the necessary competence and capabilities;

           * Experts are available, if needed;

           * Individuals meeting the criteria and eligibility requirements to perform engagement quality control review are available, where applicable; and

           * The firm is able to complete the engagement within the reporting deadline.

Integrity of Client (Ref: Para. 26(c))

A19.         With regard to the integrity of a client, matters to consider include, for example:

           * The identity and business reputation of the client's principal owners, key management, and those charged with its governance.

           * The nature of the client's operations, including its business practices.

           * Information concerning the attitude of the client's principal owners, key management and those charged with its governance towards such matters as aggressive interpretation of Australian Accounting Standards and the internal control environment.

           * Whether the client is aggressively concerned with maintaining the firm's fees as low as possible.

           * Indications of an inappropriate limitation in the scope of work.

           * Indications that the client might be involved in money laundering or other criminal activities.

           * The reasons for the proposed appointment of the firm and non‑reappointment of the previous firm.

           * The identity and business reputation of related parties.

    The extent of knowledge a firm will have regarding the integrity of a client will generally grow within the context of an ongoing relationship with that client.

A20.         Sources of information on such matters obtained by the firm may include the following:

           * Communications with existing or previous providers of professional accountancy services to the client in accordance with relevant ethical requirements, and discussions with other third parties.

           * Enquiry of other firm personnel or third parties such as bankers, legal counsel and industry peers.

           * Background searches of relevant databases.

Continuance of Client Relationship (Ref: Para. 27(a))

A21.         Deciding whether to continue a client relationship includes consideration of significant matters that have arisen during the current or previous engagements, and their implications for continuing the relationship.  For example, a client may have started to expand its business operations into an area where the firm does not possess the necessary expertise.

Withdrawal (Ref: Para. 28)

A22.         Policies and procedures on withdrawal from an engagement or from both the engagement and the client relationship address issues that include the