Elements of Quality Control
Acceptance and Continuance of Clients (PSA 220, PSQC 1)
PSQC 1 (26-28) The frm shall establish policies policies and procedures procedures or the acceptance and continuance o client relationships and specifc enaements, desined to pro!ide the frm "ith reasona reasonable ble assuran assurance ce that it "ill onl# underta$ underta$e e or continue continue relationshi relationships ps and enaements "here the frm%
capailities, includin (a) &s competent to perorm the enaement and has the capailities time and resources, to do so' competence! capailities! capailities! and Consid Considera eratio tion n o "hether "hether the frm has the competence! resources%
irm personnel ha!e $no"lede o rele!ant industries or subect matters' irm irm perso personne nnell ha!e ha!e e*per e*perien ience ce "ith "ith rele! rele!an antt reul reulato ator# r# or repor reportin tin re+ui re+uire remen ments, ts, or the abilit abilit# # to ain ain the necess necessar# ar# s$ills s$ills and $no"le $no"led de e
eecti!el#' The frm has su-cient personnel "ith the necessar# competence and capabilities' .*perts are a!ailable, i needed' &ndi!i &ndi!idua duals ls meetin meetin the criter criteria ia and eliib eliibili ilit# t# re+ui re+uire remen ments ts to peror perorm m enaement +ualit# control re!ie" are a!ailable, "here applicable' and The frm is able able to complete the enaement "ithin "ithin the reportin reportin deadline/ deadline/
re"uirements' and (b) Can compl# "ith rele!ant ethical re"uirements (c) as considered the inte#rity of the client , and does not ha!e inormation that "ould lead it to conclude that the client lac$s interit# atters to consider "ith reards to interit#
The identit# and business reputation reputation o the clients principal o"ners, $e#
manaement, and those chared "ith its o!ernance/ The nature nature o the clients clients operations, operations, includin its business business practices/ practices/ &nor &normat mation ion concer concernin nin the attitu attitude de o the the client clients s princ principa ipall o"ners o"ners,, $e# $e#
manaement and those chared "ith its o!ernance to"ards such matters as
aressi aressi!e !e interpr interpretati etation on o accounti accountin n standar standards ds and the internal internal control control
en!ironment/ 3hether the client is aressi!el# aressi!el# concerned "ith maintainin the frms ees
as lo" as possible/ &ndications o an inappropriate limitation in the scope o "or$/ &ndications that the client miht be in!ol!ed in mone# launderin or other
criminal acti!ities/ The reasons or the proposed appointment o the frm and nonreappointment nonreappointment
o the pre!ious frm/ The identit# and and business reputation reputation o related related parties/
Sources o these inormation
Comm Commun unic icat atio ions ns
"ith "ith
e*is e*isti tin n
or
pre! pre!io ious us
pro! pro!id ider ers s
o
pro proes essi sion onal al
accoun accountan tanc# c# ser!ic ser!ices es to the client client in accor accordan dance ce "ith "ith rele! rele!ant ant ethica ethicall
re+uirements, and discussions "ith other third parties/ &n+uir# o other frm personnel or third parties such as ban$ers, leal counsel
and industr# peers/ 4ac$round searches o rele!ant databases/
Such policies and procedures shall re+uire% (a) (a) The The frm frm to obta obtain in su such ch ino inorrmati mation on as it cons consid ider ers s neces ecessa sar# r# in the the circumstances beore acceptin an enaement (b) & a potential con5ict o interest is identifed in acceptin an enaement rom a ne" or an e*istin client, the frm to determine "hether it is appropriate to accept the enaement/ (c) & issues ha!e been identifed, and the frm decides to accept or continue the client relationship or a specifc enaement, the frm to document ho" the issues "ere resol!ed/ The frm shall establish policies and procedures procedures on continuin an enaement and the client client relat relation ionshi ship, p, addr address essin in the circum circumsta stance nces s "her "here e the frm frm obtain obtains s ino inorm rmat atio ion n that that "oul "ould d ha!e ha!e caus caused ed it to decl declin ine e the the ena enae eme ment nt had had that that inor inormat mation ion been been a!aila a!ailable ble earlie earlierr/ Such Such polici policies es and proce procedur dures es shall shall includ include e consideration o% (a) The proess proessiona ionall and leal leal respons responsibil ibilities ities that appl# appl# to the circums circumstanc tances, es, includin "hether there is a re+uirement or the frm to report to the person or persons "ho made the appointment or, in some cases, to reulator# authorities' and
(b) The possibilit# o "ithdra"in rom the enaement or rom both the enaement and the client relationship/
Consultation PSQC 1 ($%) Consultation 6
includes discussion at the appropriate proessional le!el, "ith indi!iduals
6
"ithin or outside the frm "ho ha!e speciali7ed e*pertise uses appropriate research resources as "ell as the collecti!e e*perience and technical e*pertise o the frm/
The frm shall establish policies and procedures desined to pro!ide it "ith reasonable assurance that% (a) Appropriate consultation ta$es place on di-cult or contentious matters' (b) Su-cient resources are a!ailable to enable appropriate consultation to ta$e place' (c) The nature and scope o, and conclusions resultin rom, such consultations are documented and are areed b# both the indi!idual see$in consultation and the indi!idual consulted' and (d) Conclusions resultin rom consultations are implemented/ .ecti!e consultation on sinifcant technical, ethical and other matters "ithin the frm or, "here applicable, outside the frm can be achie!ed "hen those consulted%
Are i!en all the rele!ant acts that "ill enable them to pro!ide inormed
ad!ice' and a!e appropriate $no"lede, seniorit# and e*perience, and "hen conclusions resultin rom consultations are appropriatel# documented and implemented/
A frm needin to consult e*ternall# ma# ta$e ad!antae o ad!isor# ser!ices pro!ided b#%
8ther frms' Proessional and reulator# bodies' or Commercial orani7ations that pro!ide rele!ant +ualit# control ser!ices/
Professional &e'elopment
9epublic Act :o/ ;2;<
Philippine Accountancy Act of 2%
ule *+ ,itle! &eclaration of Policy! .ecti'e and Scope of Practice SEC+ 2+ Declaration of Policy. = The State reconi7es the importance o accountants in nation buildin and de!elopment/ ence, it shall de'elop and
nurture competent! 'irtuous! producti'e and /ell-rounded professional accountants "hose standards o practice and ser!ice shall be e*cellent, +ualitati!e, "orld class and loball# competiti!e throuh in!iolable, honest, eecti!e, and credible licensure e*aminations and throuh re#ulatory measures!
pro#rams and
acti'ities that
foster their
professional #ro/th and
de'elopment ule *0+ Practice of Accountancy
SEC+ $2+ Continuing Professional Education (CPE) Program = All certifed public accountants shall aide y the re"uirements! rules and re#ulations on
continuin# professional education to be promulated b# the 4oard, subect to the appro!al o the Commission, in coordination "ith the accredited national proessional orani7ation o certifed public accountants or an# dul# accredited educational institutions or this purpose, a CP. Council is hereb# created to implement the CP. proram/
1 CPE EC,*0ES! &E3*4*,*4! 4A,5E! A4& A,*4AE a .ecti'es = The CP. proram shall ha!e these obecti!es%
i
To pro'ide and ensure the continuous education of a
re#istered
professional "ith
the
latest
trends
in
the
proession brouht about b# moderni7ation and scientifc and technoloical ad!ancements'
ii
To raise and maintain the professional7s capaility or deli!erin proessional ser!ices'
iii
To attain and maintain the hi#hest standards and "uality in the practice o his proession'
i!
To ma$e the professional #loally competiti'e' and
!
To promote the #eneral /elfare of the pulic /
ationale = >oluntar# compliance "ith the CP. proram is an eecti!e and credible means o ensurin# competence! inte#rity and #loal
competiti'eness of professionals in order to allo" them to continue the practice o their proession/
0*,A or CP. prorams, acti!ities or sources
i The scope shall be be#ond the basic preparation or admission to the practice o the proession/ The contents shall e
rele'ant9related! but not limited, to the practice of the profession+
ii The
prorams,
competence
acti!ities
of
the
or
sources
professional
shall y
enhance
up#radin#
the and
updatin# :no/led#e and s:ills for the practice of the profession as brought about by modernization and scientifc and technical advancements in the proession.
b Pro#rams!
Acti'ities
and
Sources
for
Accreditation
and
E"ui'alent Credit 5nits 6 An# pro!ider ma# submit to the P9C CP. Council prorams, acti!ities or sources to be appro!ed and accredited or CP. units/ The pro!ider shall be notifed o the disappro!al o his CP. prorams, acti!ities or sources "ithout prior appro!al and accreditation rom the Council/
As used in these uidelines the ollo"in terms shall mean%
a Seminars shall reer to the atherin o proessionals "hich shall include, amon others, "or$shops, technical lectures or subect matter
meetins,
non6deree
trainin
courses
and
scientifc
meetins/
b Con'entions shall reer to a atherin o proessionals "hich shall include, amon others, conerences, s#mposia or assemblies or round table discussions/
c ;asteral &e#ree shall reer to a raduate deree in accountanc#, business
or related feld rom a reconi7ed school, collee or
uni!ersit#/
d &octoral
&e#ree
shall
reer
to
a
post
raduate
deree
in
accountanc#, business or related feld rom a reconi7ed school, collee or uni!ersit#/
e
Authorship shall reer to the o"nership o intellectual propert# "hich
includes
technical
or
proessional
boo$s,
instructional
materials and the li$e/ Credits earned must be claimed "ithin one (1) #ear rom the date o publication/
Self-&irected earnin# Pac:a#e < shall reer to learnin "hich uses course manuals or accredited learnin modules/ Accredited ?earnin modules include sel6 instructional materials or prorams "hich ma# be in the orm o printed manual, audio and !ideo cassette tapes, flms, computer6assisted learnin (CA?), stud# $its, learnin aids and modules or the use o the inormation hih"a#/ These should include amon others clearl# defned obecti!es, ade+uate content and an e!aluation component or each module/
Post
=raduate9*n-Ser'ice
,rainin# shall mean trainin or
speciali7ation at the post raduate le!el or a minimum period o one (1) "ee$/
h
esource Spea:er shall reer to a proessional "ho acts as discussion leader or lecturer in a con!ention or seminar or similar atherin/
i
Peer e'ie/er shall reer to a proessional "ho acts as an e!aluator o a research paper, conerence paper or ournal article beore it is presented or published/
CPE Pro'ider shall reer to a natural person or a uridical entit# "hich includes amon others, accredited or non6accredited proessional
orani7ation,
frm,
partnership,
corporation
or
institution "hich oers, orani7es or arranes CP. prorams, acti!ities or sources or implementation and administration/
$
CPE Pro#rams! Acti'ities or Sources shall reer to the reime o
CP.
"hich
enhance
the
competence
o
the
CPAs
b#
upradin and updatin $no"lede and s$ills or the proession as brouht
about
moderni7ation
and
scientifc
and
technical
ad!ancements in the proession/ The scope shall be be#ond the basic preparation or admission to the practice o the proession/ The content shall be related but not limited to the practice o the proession/
2 CPE Credit 5nits The total CP. credit units or reistered accountin proessionals shall be si*t# (@0) credit units or three () #ears, pro!ided that a minimum o fteen (1B) credit units shall be earned in each #ear/ An# e*cess credit units in one #ear ma# be carried o!er to the succeedin #ears "ithin the three6 #ear period/ .*cess credit units earned shall not be carried o!er to
the ne*t three6#ear period e*cept credit units earned or doctoral and masters derees/
8ne credit hour o CP. proram, acti!it# or source shall be e+ui!alent to one (1) credit unit/
Sanctions
a e#istered CPAs nless
other"ise
e*empted,
reistered
CPAs
in
the
practice
o
accountanc# "ho ha!e not completed the CP. re+uirements pro!ided herein shall not be allo"ed to rene" their proessional licenses/ Those "ho ailed to rene" their proessional licenses or a period o f!e (B) continuous #ears rom initial reistration, or rom last rene"al date shall be declared delin+uent and shall, ater due notice, throuh the "ebsite and publication in the ne"sletters o P&CPA or an# ne"spaper o eneral circulation, be dropped rom the roster o CPAs/
A&&E4&5;
D
,>E P C CP E C 5 4C * CEA,*4! C ;P S *, * 4! ,E ;S 3 33*CE! 354C,*4S! ;EE,*4=S
a Creation < The 4oard, upon appro!al b# the P9C, shall create a Council "ithin thirt# (0) da#s rom the eecti!it# o this resolution/ This shall be $no"n as the P9C CP. Council "hich shall assist the 4oard in implementin its CP. proram/
E?ercise of Po/ers and 3unctions < The P9C CP. Council shall, upon a maorit# !ote, e*ercise po"ers and unctions "hich shall include but shall not be limited to the ollo"in/
i
Accept, e!aluate and appro!e applications or accreditation o CP. pro!iders/
ii
Accept, e!aluate and appro!e applications or accreditation o CP. prorams, acti!ities or sources as to their rele!ance to the proession and determine the number o CP. credit units to be earned on the basis o the contents o the proram, acti!it# or source submitted b# the CP. pro!iders/
iii
Accept, e!aluate and appro!e applications or e*emptions rom CP. re+uirements/
i!
onitor the implementation b# the CP. pro!iders o their prorams, acti!ities or sources/
!
Assess periodicall# and uprade criteria or accreditation o CP. pro!iders and CP. prorams, acti!ities or sources/
!i
Perorm such other related unctions that ma# be incidental to implementation o the CP. prorams or policies/
B
C*,E*A AC,*0*,*ES
3
ACCE&*,A,*4 S5CES@
3
P0*&ES!
EQ5*0AE4,
CE&*,
P=A;S!
54*,S@
CE&*,
EQ5*E;E4,S@ EE;P,*4S A4& ,>E ;A,,ES
a Criteria for Accreditation < *n order to merit accreditation! the follo/in# criteria shall e complied /ith
3or CPE Pro'ider
i
ust be a dul# reistered orani7ation, frm, institution or aenc#, or a proessional o ood standin and has ne!er been con!icted o a crime'
ii
Shall
ha!e
instructional
an
established
mechanism
and
updated
materials to carr# out the CP. prorams and
acti!ities'
iii
ust
ha!e
ade+uate,
modern
and
updated
instructional
materials to carr# out the CP. prorams and acti!ities'
i!
Shall ha!e instructors, lecturers, trainors and resource spea$ers "ith ood moral character, technical competence, acilitation s$ills and are holders o current CPA licenses/
A&&E4&5;
@
E?emption from CPE e"uirements@ Procedures
a Permanent E?emption A reistered proessional shall be permanentl# e*empted rom CP. re+uirements upon reachin the ae o @B #ears old/ To a!ail o this e*emption, the
i
proessional must
Submit an application or e*emption "hich should include the ollo"in data%
-
ull name, residence address and phone number o applicant
-
P9C ?icense :umber
-
.mplo#ment histor#
•
Position
ii
•
:ame o emplo#er
•
Address o emplo#er
Submit an authentic or authenticated cop# o birth certifcate/ & birth certifcates is not a!ailable, submit an# o the ollo"in% >oters &E or Eri!ers ?icense/
,emporary E?emption
b
A reistered proessional "ho is "or$in or practicin hisFher proession or urtherin hisFher studies abroad shall be temporaril# e*empted rom compliance "ith CP. re+uirement durin the period o hisFher sta# abroad, pro!ided that heFshe has been out o the countr# or at least t"o #ears immediatel# prior to the date o rene"al/
Any professional a'ailin# of this temporary e?emption must
i
Submit an application or temporar# e*emption, to include the ollo"in data%
-
ull name, residence, address and phone number o applicant'
-
P9C ?icense number'
-
Eeree obtained' collee or uni!ersit# attended, #ear raduated'
-
Principal area o proessional "or$'
-
& emplo#ed%
•
Position
-
•
:ame o emplo#er
•
Address o emplo#er,
•
Certifcate o emplo#ment
& urtherin studies abroad, certifcate o enrollment rom collee or uni!ersit# "here presentl# enrolled/
ii
Submit oriinal, or authenticated cop# o passport, photocop# o inside ront co!er, pae 2, and the paeFs containin !isa o countr#, indicatin date o arri!alFdeparture/
A permanent e*empt reistered proessional shall be allo"ed to rene" hisFher ?icense "ithout compl#in "ith the CP. re+uirements upon hisFher accomplishment and submission o the necessar# papers as pre!iousl# mentioned and upon pa#ment o the annual reistration ee or three () #ears or as lon as heFshe continues to be out o the countr#/
>irin#
(uman 9esource Policies and Practices) The most important element o the control en!ironment is personnel, "hich is "h# human resource policies and practices are essential/ 3ith trust"orth# and competent emplo#ees, "ea$nesses in other controls can be compensated and reliable fnancial statements miht still result/ onest, e-cient people are able to perorm at a hih le!el e!en "hen there are e" other controls to support them/ A compan# should ta$e care in hirin, orientation, trainin, e!aluation, counselin, promotin, compensatin, and remedial actions/ 9ecruitin practices that include ormal, in6depth emplo#ment inter!ie"s and e!idence o interit# and ethical
beha!ior result in hirin hih6+ualit# emplo#ees/ Trainin impro!es emplo#ee technical s$ills and communicates their prospecti!e roles in the enterprise/ 9otation o personnel and promotions dri!en b# periodic perormance appraisals demonstrate the entit#s commitment to its people/ Competiti!e compensation prorams that include bonus incenti!es ser!e to moti!ate and reinorce outstandin perormance/ Eisciplinar# actions send a messae that !iolations o e*pected beha!ior "ill not be tolerated/
Quality Control Policies
The Sarbanes68*le# Act (S8G) re+uires that e!er# reistered public accountin frm auditin publicl# traded companies include in their +ualit# control policies standards relatin to% monitorin o proessional ethics and independence rom issuers on behal o "hich the frm issues audit reports' consultation "ithin such frm on accountin and auditin +uestions' super!ision o audit "or$' hirin, proessional de!elopment, and ad!ancement o personnel' the acceptance and continuation o audit enaements' internal inspection' such other re+uirements as the Pulic Company Accountin# 'ersi#ht
oard (PCA) ma# prescribe/
PCA84 &nspections
&n order to insure +ualit# control, the PCA84 conducts a continuin proram o inspections to assess the deree o compliance o the audit frms perormance o audits and issuance o audit reports "ith the rules o the PCA84 and proessional standards/ The PCA84 e!aluates the su-cienc# o the +ualit# control s#stem o the frm, and the manner o the documentation and communication o that s#stem b# the frm' and perorms such testin as appropriate o the audit, super!isor#, and +ualit# control procedures o the frm/
E?-Employee ConBicts of *nterest &n determinin the acceptance and continuation o audit enaements the audit frm must consider e*6emplo#ee con5icts o interest and audit partner rotation/ An
accountin frm cannot perorm an# audit ser!ice or a frm i a chie e*ecuti!e o-cer, controller, chie fnancial o-cer, chie accountin o-cer, or e+ui!alent position, "as emplo#ed b# that accountin frm and participated in an# capacit# in the audit o that issuer durin the one6#ear period precedin the date o the initiation o the audit/ The audit partner must be rotated a"a# rom that client e!er# f!e #ears/
Partnership e'ie/ and otation Audits should be re!ie"ed b# partners in the accountin frm not connected "ith the audit and should rotate their audit partners e!er# f!e #ears/ nder S8G, section 10, auditors should pro!ide a concurrin or second partner re!ie" b# a +ualifed person associated "ith the public accountin frm, other than the person in chare o the audit, or b# an independent re!ie"er/
The Sarbanes68*le# Act re+uires that e!er# reistered public accountin frm auditin publicl# traded companies include in their +ualit# control policies standards relatin to all o the ollo"in e*cept% (A) Consultation "ithin such frm on accountin and auditin +uestions/ (4) irin, proessional de!elopment, and ad!ancement o personnel/ (C) &nternal control policies/ (E) &nternal inspection/
S8G, section 0 ma$es it unla"ul or a reistered public accountin frm to pro!ide audit ser!ices to an issuer i the lead audit partner ha!in primar# responsibilit# or the audit, or the audit partner responsible or re!ie"in the audit, has perormed audit ser!ices or that issuer in each o the f!e pre!ious fscal #ears o that issuer/ Section 10 also states the +ualit# control standards that "ere discussed in 11/ Qualit# Control, abo!e/
Audit Committee e'ie/ of Auditors nder S8G, section 01, public compan# audit committees are directl# responsible or the appointment, compensation, and o!ersiht o the "or$ o an# reistered public accountin frm emplo#ed b# their compan# (includin resolution o disareements bet"een manaement and the auditor reardin fnancial reportin)/
.ach such reistered public accountin frm reports directl# to the audit committee/ Auditors ma# also ha!e to discuss accountin complaints "ith the audit committee/ .ach audit committee must ha!e established procedures or the receipt, retention, and treatment o complaints reardin accountin, internal accountin controls, or auditin matters/
P;= >irin# Policies :elnet Audit Committee Polic# = The irin o ormer .mplo#ees o HPI (last appro!ed b# the 4oard o Eirectors on F22F0J)
.ecti'e To compl# "ith the Act and related S.C rules and other"ise to a!oid actual or percei!ed con5icts o interest that miht arise rom the hirin o an indi!idual "ho as an emplo#ee o HPI participated, be#ond a certain minimum le!el, in the audit o :elnet/
Application Since HPI is the outside accountin frm that audits :elnets consolidated fnancial statements, this section applies onl# to the hirin o current and ormer proessional emplo#ees o that frm/ &t does not appl# to hirin administrati!e sta o HPI or to hirin proessional or administrati!e emplo#ees o an# other outside accountin frm/ Should :elnet replace HPI as its primar# e*ternal auditor, this polic# "ill appl# to the ne" auditin frm and continue to appl# to HPI or the time periods described belo"/
Policy nless the e*ception described belo" applies and until the specifed time period passes, neither :elnet nor an# consolidated subsidiar# "hose assets or re!enues constitute more than 20 percent o :elnet consolidated assets or re!enues, ma# hire or appoint in a Kfnancial reportin o!ersiht roleL the ollo"in current or ormer emplo#ees o HPI% the lead partner, the concurrin partner or an# other member o the Kaudit enaement teamL "ith more than minimal in!ol!ement in a :elnet audit as described belo"/ :one o these persons ma# be hired or appointed in such a role until the passae o a ull enaement period rom their last in!ol!ement or more than 10 hours pro!idin audit, re!ie" or attest ser!ices in an#
:elnet audit "hich is listed in the annual HPI Client Ser!ice Plan/ An enaement period beins on the da# ollo"in the flin o the annual orm 106H and ends on the da# the ne*t orm 106H is fled/
&n addition, a current or ormer emplo#ee o HPI cannot be hired i that indi!idual ser!es in an Kaccountin roleL ("hich includes a fnancial reportin o!ersiht role) and that person (i) in5uences the accountin frms operations or fnancial policies' (ii) has a capital balance in the accountin frm' or (iii) has a fnancial arranement "ith the accountin orm other than one pro!idin or reular pa#ment o a f*ed dollar amount% (A) pursuant to a ull# unded retirement plan, rabbi trust, or in urisdictions in "hich a rabbi trust does not e*ist, a similar !ehicle, or (4) in the case o a ormer proessional emplo#ee "ho "as not a partner, principal or shareholder o the accountin frm and "ho has not been disassociated rom the accountin frm or more than three #ears, that is immaterial to the ormer proessional emplo#ee/
&eDnitions “Financial reporting oversight role” means a role in "hich a person is in a position to or does e*ercise in5uence o!er the contents o the fnancial statements o :elnet or an#one "ho prepares or appro!es them, such as a member o the board o directors, the co6chie e*ecuti!e o-cers, the chie fnancial o-cer, the audit committee e*ecuti!e, the director o internal audit, the director o fnancial reportin or an# e+ui!alent position/ Questions about the scope o this defnition should be reerred to the audit committee e*ecuti!e/
KAudit enaement teamL means all partners, principals, shareholders and proessional emplo#ees participatin in an audit, re!ie", or attestation enaement o an audit client, includin those conductin concurrin or second partner re!ie"s and all persons "ho consult "ith others on the audit enaement team durin the audit, re!ie" or
attestation enaement reardin technical or industr#6specifc issues, transactions or e!ents/
KAccountin roleL reers to a role "here a person can or does e*ercise more than minimal in5uence o!er the contents o the accountin records or o!er an# person "ho prepares the accountin records/ All persons in a Kfnancial reportin o!ersiht roleL also are in an Kaccountin role/L Persons in an accountin role include indi!iduals in clerical positions responsible or accountin records (e//, pa#roll, accounts pa#able, accounts recei!able, purchasin, sales) as "ell as those "ho report to indi!iduals in fnancial reportin o!ersiht roles/
E?ceptions This polic# does not appl# to persons emplo#ed b# :elnet as a result o a business combination so lon as the person "as not hired b# the other part# in contemplation o the business combination and the Audit Committee is inormed in "ritin "ithin 06da#s o completion o the business combination o the prior emplo#ment relationship/
Procedures < 4otiDcation efore o ers to P;= Personnel 3hile this polic# prohibits the emplo#ment o certain current or proessional emplo#ees o HPI, the audit committee e*ecuti!e should be notifed o an oer o emplo#ment to an# current or ormer proessional emplo#ee o HPI prior to the e*tension o the oer/
Assi#nment of Personnel to En#a#ement ,eam
M
(PSA 00, par/ D N AB) The enaement partner and other $e#
members o the enaement team shall be in!ol!ed in plannin the audit, includin plannin and participatin in the discussion amon enaement team members/ Their in!ol!ement dra"s on their e*perience and insiht, thereb# enhancin the eecti!eness and e-cienc# o the plannin process
M
(PSA 220, par/ 1D) The enaement team, and an# auditors e*perts
"ho are not part o the enaement team, collecti!el# should ha!e the appropriate competence and capabilities to% o
(a) Perorm the audit enaement in accordance "ith proessional
standards and reulator# and leal re+uirements o
(b) .nable an auditors report that is appropriate in the circumstances
to be issued/ M
(PSA 220, par/ A11) 3hen considerin the appropriate competence and
capabilities e*pected o the enaement team as a "hole, the enaement partner ma# ta$e into consideration such matters as the teams% o a
nderstandin o, and practical e*perience "ith, audit enaements o similar
nature
and
comple*it#
throuh
appropriate
trainin
and
participation/ o
nderstandin o proessional standards and reulator# and leal
re+uirements/ o
Technical e*pertise, includin e*pertise "ith rele!ant inormation
technolo# and speciali7ed areas o accountin or auditin/ o
Hno"lede o rele!ant industries in "hich the client operates/
o
Abilit# to appl# proessional udment/
o
nderstandin o the frms +ualit# control policies and procedures/
M
(PSQC 1, par/ 0) The frm shall assin responsibilit# or each
enaement to an enaement partner and shall establish policies and procedures re+uirin that% o
(a) The identit# and role o the enaement partner are communicated
to $e# members o client manaement and those chared "ith o!ernance' o
(b)
The
enaement
partner
has
the
appropriate
competence,
capabilities, and authorit# to perorm the role' and o
(c) The responsibilities o the enaement partner are clearl# defned
and communicated to that partner/ M
(PSQC 1, par/ A2B) Competence can be de!eloped throuh a !ariet# o
methods, includin the ollo"in%
o
Proessional education/
o
Continuin proessional de!elopment, includin trainin/
o
3or$ e*perience/
o
Coachin b# more e*perienced sta, or e*ample, other members o
the enaement team/ o
&ndependence education or personnel "ho are re+uired to be
independent/ M
(PSQC 1, par/ A2@) The continuin competence o the frms personnel
depends to a sinifcant e*tent on an appropriate le!el o continuin proessional de!elopment so that personnel maintain their $no"lede and capabilities/ .ecti!e policies and procedures emphasi7e the need or continuin trainin or all le!els o frm personnel, and pro!ide the necessar# trainin resources and assistance to enable personnel to de!elop and maintain the re+uired competence and capabilities/ M
(PSQC par/ A2J) The frm ma# use a suitabl# +ualifed e*ternal person,
or e*ample, "hen internal technical and trainin resources are una!ailable/ M
(PSQC
1,
par/
A2<)
Perormance e!aluation,
compensation
and
promotion procedures i!e due reconition and re"ard to the de!elopment and maintenance o competence and commitment to ethical principles/ Steps a frm ma# ta$e in de!elopin and maintainin competence and commitment to ethical principles include% o
a$in
personnel
a"are
o
the
frms
e*pectations
reardin
perormance and ethical principles o
Pro!idin
personnel
"ith
e!aluation
o,
and
counselin
on,
perormance, proress and career de!elopment o
elpin personnel understand that ad!ancement to positions o
reater responsibilit# depends, amon other thins, upon perormance +ualit# and adherence to ethical principles, and that ailure to compl# "ith the frms policies and procedures ma# result in disciplinar# action/ M
(PSQC 1, par/ A0) Policies and procedures ma# include s#stems to
monitor the "or$load and a!ailabilit# o enaement partners so as to
enable these indi!iduals to ha!e su-cient time to ade+uatel# dischare their responsibilities
