Introduction (330.1 to 330.2)
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330.1

Professional accountants are required to comply with the fundamental principles and apply the conceptual framework set out in Section 120 to identify, evaluate and address threats.

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330.2

The level and nature of fee and other remuneration arrangements might create a self-interest threat to compliance with one or more of the fundamental principles. This section sets out specific application material relevant to applying the conceptual framework in such circumstances.

Application Material

Level of Fees (330.3 A1 to 330.3 A4)
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330.3 A1

The level of fees quoted might impact a professional accountant's ability to perform professional services in accordance with professional standards.

  • Non-Authoritative Guidance
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330.3 A2

A professional accountant might quote whatever fee is considered appropriate. Quoting a fee lower than another accountant is not in itself unethical. However, the level of fees quoted creates a self-interest threat to compliance with the principle of professional competence and due care if the fee quoted is so low that it might be difficult to perform the engagement in accordance with applicable technical and professional standards.

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330.3 A3

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

  • Whether the client is aware of the terms of the engagement and, in particular, the basis on which fees are charged and which professional services the quoted fee covers.

  • Whether the level of the fee is set by an independent third party such as a regulatory body.

  • Non-Authoritative Guidance
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330.3 A4

Examples of actions that might be safeguards to address such a self-interest threat include:

  • Adjusting the level of fees or the scope of the engagement.

  • Having an appropriate reviewer review the work performed.

Contingent Fees (330.4 A1 to 330.4 A4)
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330.4 A1

Contingent fees are used for certain types of non-assurance services. However, contingent fees might create threats to compliance with the fundamental principles, particularly a self-interest threat to compliance with the principle of objectivity, in certain circumstances.

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330.4 A2

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

  • The nature of the engagement.

  • The range of possible fee amounts.

  • The basis for determining the fee.

  • Disclosure to intended users of the work performed by the professional accountant and the basis of remuneration.

  • Quality control policies and procedures.

  • Whether an independent third party is to review the outcome or result of the transaction.

  • Whether the level of the fee is set by an independent third party such as a regulatory body.

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330.4 A3

Examples of actions that might be safeguards to address such a self-interest threat include:

  • Having an appropriate reviewer who was not involved in performing the non-assurance service review the work performed by the professional accountant.

  • Obtaining an advance written agreement with the client on the basis of remuneration.

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330.4 A4

Requirements and application material related to contingent fees for services provided to audit or review clients and other assurance clients are set out in International Independence Standards.

Referral Fees or Commissions (330.5 A1 to 330.5 A2)
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330.5 A1

A self-interest threat to compliance with the principles of objectivity and professional competence and due care is created if a professional accountant pays or receives a referral fee or receives a commission relating to a client. Such referral fees or commissions include, for example:

  • A fee paid to another professional accountant for the purposes of obtaining new client work when the client continues as a client of the existing accountant but requires specialist services not offered by that accountant.

  • A fee received for referring a continuing client to another professional accountant or other expert where the existing accountant does not provide the specific professional service required by the client.

  • A commission received from a third party (for example, a software vendor) in connection with the sale of goods or services to a client.

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330.5 A2

Examples of actions that might be safeguards to address such a self-interest threat include:

  • Obtaining an advance agreement from the client for commission arrangements in connection with the sale by another party of goods or services to the client might address a self-interest threat.

  • Disclosing to clients any referral fees or commission arrangements paid to, or received from, another professional accountant or third party for recommending services or products might address a self-interest threat.

Purchase or Sale of a Firm (330.6 A1)
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330.6 A1

A professional accountant may purchase all or part of another firm on the basis that payments will be made to individuals formerly owning the firm or to their heirs or estates. Such payments are not referral fees or commissions for the purposes of this section.