Introduction (525.1 to 525.2)
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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.

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The loan of personnel to an audit client might create a self-review, advocacy or familiarity threat. This section sets out specific requirements and application material relevant to applying the conceptual framework in such circumstances.

Requirements and Application Material

General (525.3 A1 to R525.4)
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525.3 A1

Examples of actions that might be safeguards to address threats created by the loan of personnel by a firm or a network firm to an audit client include:

  • Conducting an additional review of the work performed by the loaned personnel might address a self-review threat.

  • Not including the loaned personnel as an audit team member might address a familiarity or advocacy threat.

  • Not giving the loaned personnel audit responsibility for any function or activity that the personnel performed during the loaned personnel assignment might address a self-review threat.

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525.3 A2

When familiarity and advocacy threats are created by the loan of personnel by a firm or a network firm to an audit client, such that the firm or the network firm becomes too closely aligned with the views and interests of management, safeguards are often not available.

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A firm or network firm shall not loan personnel to an audit client unless:

  • Such assistance is provided only for a short period of time;

  • The personnel are not involved in providing non-assurance services that would not be permitted under Section 600 and its subsections; and

  • The personnel do not assume management responsibilities and the audit client is responsible for directing and supervising the activities of the personnel.

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