Introduction (430.1 to 430.2)
  • Bookmark

Firms are required to comply with the fundamental principles, be independent and apply the conceptual framework set out in Section 120 to identify, evaluate and address threats to independence.

  • Bookmark

When litigation with an audit client occurs, or appears likely, self-interest and intimidation threats are created. This section sets out specific application material relevant to applying the conceptual framework in such circumstances.

Application Material

General (430.3 A1 to 430.3 A4)
  • Bookmark
430.3 A1

The relationship between client management and audit team members must be characterized by complete candor and full disclosure regarding all aspects of a client's operations. Adversarial positions might result from actual or threatened litigation between an audit client and the firm, a network firm or an audit team member. Such adversarial positions might affect management's willingness to make complete disclosures and create self-interest and intimidation threats.

  • Bookmark
430.3 A2

Factors that are relevant in evaluating the level of such threats include:

  • The materiality of the litigation.

  • Whether the litigation relates to a prior audit engagement.

  • Bookmark
430.3 A3

If the litigation involves an audit team member, an example of an action that might eliminate such self-interest and intimidation threats is removing that individual from the audit team.

  • Bookmark
430.3 A4

An example of an action that might be a safeguard to address such self-interest and intimidation threats is to have an appropriate reviewer review the work performed.

Note About Available Versions

This version includes content that has been approved by the IESBA but is either not yet effective or has been superseded by a newer version. You are able to return to the extant version at any time by clicking on “Return to Extant Version” in the black bar at the top of any page.

I Understand

December 2021

You are now leaving the extant Code to view another version that contains passages that have either been superseded or that have been issued but are not yet effective.

This version of the eCode incorporates revisions to the Code to promote the role and mindset expected of professional accountants.

Revisions to the Code to promote the role and mindset expected of professional accountants will be effective as of December 31, 2021. Early adoption will be permitted


I Understand