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A summary list of the explicit prohibitions in the Code is provided below. This list details those provisions that contain a "shall not" statement and is a subset of the Requirements set out in the Code.  

A professional accountant is required to apply the principles-based provisions in the conceptual framework set out in Section 120 to identify, evaluate and address threats to compliance with the fundamental principles of ethics and, where applicable, to independence. These explicit prohibitions are the result of the IESBA applying that conceptual framework to certain situations and determining that threats to compliance with the fundamental principles are at a level at which actions or safeguards cannot be applied. Accordingly, the activity, interest or relationship is prohibited by the Code.  This list should not be viewed as all-inclusive because the application of the conceptual framework might result in the professional accountant concluding that the threats created by a particular situation can only be addressed by declining or ending the specific professional activity.

Some of these prohibitions apply to audits of entities that are public interest entities only.

 

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INDEPENDENCE FOR AUDIT AND REVIEW ENGAGEMENTS > FINANCIAL INTERESTS

R510.6

When an entity has a controlling interest in an audit client and the client is material to the entity, neither the firm, nor a network firm, nor an audit team member, nor any of that individual’s immediate family shall hold a direct or material indirect financial interest in that entity....

INDEPENDENCE FOR AUDIT AND REVIEW ENGAGEMENTS > FINANCIAL INTERESTS

R510.7

Paragraph R510.4 shall also apply to a financial interest in an audit client held in a trust for which the firm, network firm or individual acts as trustee, unless: None of the following is a beneficiary of the trust: the trustee, the audit team member or any of that individual’s immediate family, the firm or a network firm; The interest in the audit client held by the trust is not material to the trust; The trust is not able to ...

INDEPENDENCE FOR AUDIT AND REVIEW ENGAGEMENTS > FINANCIAL INTERESTS

R510.8

A firm, or a network firm, or an audit team member, or any of that individual’s immediate family shall not hold a financial interest in an entity when an audit client also has a financial interest in that entity, unless: The financial interests are immaterial to the firm, the network firm, the audit team member and that individual’s immediate family member and the audit client, as applicable; or The audit client cannot exercise significant influence over the entity. Before ...

INDEPENDENCE FOR AUDIT AND REVIEW ENGAGEMENTS > LOANS AND GUARANTEES

R511.4

A firm, a network firm, an audit team member, or any of that individual’s immediate family shall not make or guarantee a loan to an audit client unless the loan or guarantee is immaterial to: The firm, the network firm or the individual making the loan or guarantee, as applicable; and The client. ...

INDEPENDENCE FOR AUDIT AND REVIEW ENGAGEMENTS > LOANS AND GUARANTEES

R511.5

A firm, a network firm, an audit team member, or any of that individual’s immediate family shall not accept a loan, or a guarantee of a loan, from an audit client that is a bank or a similar institution unless the loan or guarantee is made under normal lending procedures, terms and conditions....

INDEPENDENCE FOR AUDIT AND REVIEW ENGAGEMENTS > LOANS AND GUARANTEES

R511.6

A firm, a network firm, an audit team member, or any of that individual’s immediate family shall not have deposits or a brokerage account with an audit client that is a bank, broker or similar institution, unless the deposit or account is held under normal commercial terms....

INDEPENDENCE FOR AUDIT AND REVIEW ENGAGEMENTS > LOANS AND GUARANTEES

R511.7

A firm, a network firm, an audit team member, or any of that individual’s immediate family shall not accept a loan from, or have a borrowing guaranteed by, an audit client that is not a bank or similar institution, unless the loan or guarantee is immaterial to: The firm, the network firm, or the individual receiving the loan or guarantee, as applicable; and The client. ...

INDEPENDENCE FOR AUDIT AND REVIEW ENGAGEMENTS > BUSINESS RELATIONSHIPS

R520.4

A firm, a network firm or an audit team member shall not have a close business relationship with an audit client or its management unless any financial interest is immaterial and the business relationship is insignificant to the client or its management and the firm, the network firm or the audit team member, as applicable....

INDEPENDENCE FOR AUDIT AND REVIEW ENGAGEMENTS > BUSINESS RELATIONSHIPS

R520.5

A firm, a network firm, an audit team member, or any of that individual’s immediate family shall not have a business relationship involving the holding of an interest in a closely-held entity when an audit client or a director or officer of the client, or any group thereof, also holds an interest in that entity, unless: The business relationship is insignificant to the firm, the network firm, or the individual as applicable, and the client; The financial interest is immaterial ...

INDEPENDENCE FOR AUDIT AND REVIEW ENGAGEMENTS > FAMILY AND PERSONAL RELATIONSHIPS

R521.5

An individual shall not participate as an audit team member when any of that individual’s immediate family: Is a director or officer of the audit client; Is an employee in a position to exert significant influence over the preparation of the client’s accounting records or the financial statements on which the firm will express an opinion; or Was in such position during any period covered by the engagement or the financial statements. ...

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