Document ID: chunk:federal_register_of_legislation:F2023C01118:body:0:p36
Version: federal_register_of_legislation:F2023C01118
Segment Type: other
Provision Reference: 
Character Range: 107257–110413

and Circumstances of the Engagement and the Integrity and Ethical Values of the Client (Ref: Para. 30(a)(i))

A67.         The information obtained about the nature and circumstances of the engagement may include:

           * The industry of the entity for which the engagement is being undertaken and relevant regulatory factors;

           * The nature of the entity, for example, its operations, organisational structure, ownership and governance, its business model and how it is financed; and

           * The nature of the underlying subject matter and the applicable criteria, for example, in the case of integrated reporting:

                   + The underlying subject matter may include social, environmental or health and safety information; and

                   + The applicable criteria may be performance measures established by a recognised body of experts.

A68.         The information obtained to support the firm's judgements about the integrity and ethical values of the client may include the identity and business reputation of the client's principal owners, key management, and those charged with its governance.
Examples of factors that may affect the nature and extent of information obtained about the integrity and ethical values of the client

      * The nature of the entity for which the engagement is being performed, including the complexity of its ownership and management structure.

      * 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 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 a client-imposed 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.

A69.         The firm may obtain the information from a variety of internal and external sources, including:

           * In the case of an existing client, information from current or previous engagements, if applicable, or enquiry of other personnel who have performed other engagements for the client.

           * In the case of a new client, enquiry of existing or previous providers of professional accountancy services to the client, in accordance with relevant ethical requirements.

           * Discussions with other third parties, such as bankers, legal counsel and industry peers.

           * Background searches of relevant databases (which may be intellectual resources). In some cases, the firm may use a service provider to perform the background search.

A70.         Information that is obtained during the firm's acceptance and continuance process may often also be relevant to the engagement team when planning and