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Breach of a Requirement of the Code

Breach of a Requirement of the Code. Kate Spargo. New York City, U.S.A. . October 17 - 19, 2011 . Recap. Warsaw and July Conference Call . Suspend, terminate or eliminate interest or relationship that created the breach Comply with any legal requirements

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Breach of a Requirement of the Code

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  1. Breach of a Requirement of the Code Kate Spargo New York City, U.S.A. October 17 - 19, 2011

  2. Recap Warsaw and July Conference Call • Suspend, terminate or eliminate interest or relationship that created the breach • Comply with any legal requirements • Evaluate significance of breach and determine whether action can be taken (reasonable and informed third party test) • If cannot take action to satisfactorily address, discuss with those charged with governance and terminate engagement

  3. Recap Continued Warsaw and July Conference Call • If firm believes action can be taken, discuss breach with those charged with governance as soon as possible, and obtain their approval • Guidance for a breach that occurred in a prior period • Documentation requirement • CAG September meeting • Task Force met after CAG to finalize

  4. Breach CAG Comments • Timing of communication – one suggested immediately, many agreed it was important to communicate without delay • Requirement to report to a regulator – suggested by one • Agreed that Code should contain some general guidance on how to address a breach other than independence • Important to consider cumulative effect of breaches • Some editorial suggestions

  5. New Paragraph 100.10 • Sections 290 and 291 contain provisions with which a professional accountant shall comply if the professional accountant identifies a breach of an independence provision of the Code. If a professional accountant identifies a breach of any other provision of this Code, the professional accountant shall take steps as soon as possible, if any are available, to terminate or eliminate the circumstances or relationship that caused the breach. The professional accountant shall evaluate the significance of the breach and determine whether there are any actions that can be taken to address the consequences of the breach, including reporting the breach to those who may have been affected by the breach. The professional accountant shall comply with any duty to report a breach of a provision of this Code.

  6. Conflicts of Interest Any Questions

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