Sample for Guidance Only: Modify to Suit Circumstances.
Independence Documentation
For Review Engagements
The Institute of Chartered Accountants of Alberta acknowledges with thanks the Institute of Chartered Accountants of
British Columbia for their permission to re-produce and distribute this document.
This checklist is designed to assist sole practitioners and small firms in their review engagements and should be
completed prior to accepting a new engagement and on an annual basis for each existing review engagement.
This checklist has been provided for illustrative purposes only and does not represent an official position of
CICA or the AB Institute. Practitioners are encouraged to use their professional judgment in using this
questionnaire and consider modifying the contents to suit their needs and their clients’ circumstances.
Members should also review Rule 204 and the related guidelines.
Part 1
Nature of Engagement
Name of client:
Year or period end of Review:
General Prohibitions
Do any General Prohibitions as set out in Rule 204.4 apply to this engagement?
Description of General Prohibition
Direct financial interest or material indirect financial interest in client by firm, member or
student.
Loan or guarantee from or to the client where the client is not a bank or similar
institution.
Close business relationship with client or its management.
Immediate family members of member or student serving as directors, officers, or
employees of client.
Recent service of member or student with client as an officer or director or employee
during the period covered by the engagement.
Serving as officer, director or company secretary for client.
Performing management activities or making any management decisions (such as
authorizing transactions) for the client.
Preparation or changes to journal entries or other accounting records without client
management approval.
Provision of legal services to the client that is material to the financial statements during
the period covered by the engagement.
Provision of corporate finance or similar services to the client during the period covered
by the engagement.
Fee for this engagement significantly lower than that charged by the prior accountants.
(If yes, review documentation requirements.)
Acceptance of significant gifts or hospitality by member or student from the client.
Yes
No
If you answered yes to any of the above, you have identified a probable impairment to your independence that cannot
be managed. You will need to review the related rules and council interpretations in depth and very carefully consider
and document all the circumstances. If the circumstances cannot be resolved, it is likely that you may not provide any
assurance services to the client and must decline or discontinue the assurance engagement. In that case, discuss
with the client if a compilation engagement is appropriate for their needs. If so, you must then disclose the nature and
extent of the impairment in the Notice to Reader report.
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Independence Documentation
Part 2
Threats
Threat (See Notes for details)
Are there self-interest threats related to this client?
Are there self-review threats related to this client?
Are there advocacy threats related to this client?
Are there familiarity threats related to this client?
Are there intimidation threats related to this client?
Are there other circumstances that would threaten your independence or the
appearance of your independence?
Yes
No
If yes, describe in detail and include factors such as materiality and the nature of the
engagement:
Are there any significant threats to your independence or the appearance of
⃞ Yes ⃞ No
your independence?
If yes, proceed to Part 3 Safeguards to identify possible safeguards that may eliminate or reduce threats to an
acceptable level.
If no, proceed to Part 4 Conclusion to document the insignificance of threats before proceeding with engagement.
Part 3
Safeguards
Safeguard
Are the results of the services explained to the client?
Yes
No
Is client approval and acceptance for the results of the engagement obtained?
Did the firm pass the last provincial practice inspection?
Has the firm consulted with staff from the provincial Institute about the threats to its
independence?
Describe other safeguards that may eliminate threats to your independence or reduce them to an acceptable level.
Part 4
Conclusion
Are the threats to independence insignificant?
OR
⃞ Yes
⃞ No
Are the safeguards effective in eliminating the threats or reducing them to an
acceptable level?
⃞ Yes
⃞ No
Should the firm accept or continue with the engagement?
⃞ Yes
⃞ No
Practice Aid – Review Engagements
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Independence Documentation
Explain how, in the member’s or firm’s professional judgement the safeguards eliminate the threat or reduce it to an
acceptable level.
Prepared by:
Approved by:
________________
________________
Date:
Date:
____________________
____________________
NOTES
Part 2
Threats:
A self-interest threat occurs when a firm or a person on the engagement team could benefit from a financial interest
in, or other self-interest conflict with, an assurance client. Examples include:

Dependence by the firm as a whole or by an individual partner on total fees from this client.

Serious concern about the possibility of losing the engagement.

Significant amount of unpaid fees from prior engagements.
A self-review threat occurs when any product or judgment from a previous engagement needs to be evaluated in
reaching conclusions on the particular assurance engagement. Examples include:

Member of the firm or the firm performed services for this client that directly affect the subject matter of the
engagement.

Member of the firm or the firm prepared any original data or records that are the subject matter of the
engagement.
An advocacy threat occurs when a firm, or a person on the engagement team, promotes, or may be perceived to
promote, an assurance client’s position or opinion to the point that objectivity may, or may be perceived to be,
impaired. Examples include:


Member of the firm or the firm dealt in or promoted shares or other securities of this client.
Member of the firm or the firm acted as an advocate on behalf of an assurance client in litigation or in
resolving disputes with third parties.
A familiarity threat occurs when, by virtue of a close or long-term relationship with an assurance client, its directors,
officers or employees, a firm or a person on the engagement team becomes too sympathetic to the client’s interests.
Examples include:

A former partner of the firm is a director, officer or employee of the client in a position to exert direct and
significant influence over the subject matter of this engagement.

There is a long association of a senior person on the engagement team with the client.

An intimidation threat occurs when a person on the engagement team may be deterred from acting

objectively and exercising professional skepticism by threats, actual or perceived, from the directors, officers
or employees of an assurance client. Examples include:

Client threatened to replace the firm due to a disagreement with the application of an accounting principle.

Client applied pressure to inappropriately reduce the extent of work performed in order to reduce or limit
fees.

There is actual or threatened litigation between the firm and this client.
Practice Aid – Review Engagements
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