Document ID: chunk:federal_register_of_legislation:F2020C00630:reg:25:p18
Version: federal_register_of_legislation:F2020C00630
Segment Type: reg
Provision Reference: reg 25 (pt 18/31)
Character Range: 59216–62382

and its operations;

               * The entity's senior management; or

               * The underlying subject matter and subject matter information of the assurance engagement.

A13.         [Deleted by the AUASB.  Refer Aus A13.1]

         Aus A13.1 Relevant ethical requirements include examples of factors that are relevant to evaluating the level of a threat that may arise when an individual is involved in an assurance engagement over a long period of time. Relevant ethical requirements also provide examples of actions to address threats, including:

               * Eliminating the threat by rotating the individual off the engagement team; or

               * Applying safeguards to reduce the threat to an acceptable level, for example by performing regular independent internal or external quality reviews of the engagement.

A14.          [Deleted by the AUASB.  Refer Aus A14.1].

Aus A14.1 Relevant ethical requirements and the Corporations Act 2001 require the rotation of the engagement partner, the engagement quality control reviewer, and other key audit partners in respect of certain engagements.

Considerations specific to public sector audit organisations

A15.         Statutory measures may provide safeguards for the independence of public sector auditors.  However, threats to independence may still exist regardless of any statutory measures designed to protect it.  Therefore, in establishing the policies and procedures required by paragraphs 20‑25, the public sector auditor may have regard to the public sector mandate and address any threats to independence in that context.

A16.         Listed entities as referred to in paragraphs 25 and A14 are not common in the public sector.  However, there may be other public sector entities that are significant due to size, complexity or public interest aspects, and which consequently have a wide range of stakeholders.  Therefore, there may be instances when a firm determines, based on its quality control policies and procedures, that a public sector entity is significant for the purposes of expanded quality control procedures.

A17.         In the public sector, legislation may establish the appointments and terms of office of the auditor with engagement partner responsibility.  As a result, it may not be possible to comply strictly with the engagement partner rotation requirements envisaged for listed entities.  Nonetheless, for public sector entities considered significant, as noted in paragraph A16, it may be in the public interest for public sector audit organisations to establish policies and procedures to promote compliance with the spirit of rotation of engagement partner responsibility.

Acceptance and Continuance of Client Relationships and Specific Engagements

Competence, Capabilities, and Resources (Ref: Para. 26(a))

A18.         Consideration of whether the firm has the 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