Auditing & Attestation (AUD)

Responsibilities; The Public Interest; Integrity; Objectivity and Independence; Due Care; and Scope and Nature of Services. They are aspirational and not directly enforceable, unlike the Rules.

Only members in public practice who perform attest engagements (audits, reviews, examinations, certain agreed-upon procedures) — and their firm and covered members. Members in business and those performing only non-attest services are subject to Integrity and Objectivity but not the Independence Rule.

A covered member is: (1) an individual on the attest engagement team; (2) an individual who can influence the engagement (e.g., a reviewer or those in the chain of command); (3) a partner or manager who provides 10+ hours of nonattest services to the client; (4) a partner in the office where the lead engagement partner practices; (5) the firm and its benefit plans; and (6) entities controlled by any of the above.

Any direct financial interest (regardless of amount) impairs independence. A material indirect financial interest also impairs independence; an immaterial indirect interest does not.

A direct interest is owned/controlled by the member (e.g., shares held personally or through a self-directed account). An indirect interest is held through an intermediary the member does not control (e.g., a diversified mutual fund). Direct interests impair regardless of amount; indirect interests impair only if material.

When no specific rule applies, a member evaluates threats to independence, and if a threat is not at an acceptable level, applies safeguards to eliminate or reduce it. Threat categories: self-review, advocacy, adverse interest, familiarity, undue influence, self-interest, and management participation.