Threats to the objectivity and independence of a firm can relate to its eligibility as a registered auditor.
To be a registered auditor, firms must meet the criteria for eligibility set out in the ICAEW Audit Regulations and Guidance and continue to do so even when compliance is affected by changes to activities, appointments and structure within a firm.
Sometimes such changes – and their implications – can be overlooked, but they are important. Not acting or reacting appropriately and in a timely manner may lead to unintended and unwelcome consequences, such as failure to pay registration fees, being reported (after an audit monitoring review) to the Audit Registration Committee (ARC) or the imposition of a regulatory penalty.
Compliance with the criteria is essential for a number of reasons. Not least because of the role this plays in ensuring that only appropriately qualified individuals can exercise control over the activities of a registered audit firm. This enables those individuals to influence and, where necessary, safeguard the quality of audit work where the other activities of the firm, or of its principals who are not audit qualified, could be a risk to the firm’s objectivity and independence.
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