Review of Requirements for the Registration and Regulation of

Recommendation 7.16

The Law should be amended to require an auditor, or a representative of the auditor, to attend the AGM at which the auditor’s report is tabled unless reasonable circumstances preclude his or her attendance.

Restriction on Fee Levels for a Particular Client

777. AUP 32 recommends that, in order to strengthen independence, fees from one audit client or a group of audit clients not exceed an appropriate limit of the gross fees of the practice, set according to individual circumstances. AUP 32 states that the auditor should consider and document the effect on independence when the total fees in the financial reporting period paid by the audit client or group of clients exceeds 15 per cent of the gross fees of the practice.

778. Small practitioners are opposed to such a recommendation becoming mandatory on the grounds of discrimination. They point out that independence is a state of mind and in view of the stringent ethical rulings of the ICAA and ASCPA relative to independence, there is no need or benefit to be obtained from greater restrictions.

779. The Working Party is of the view that the principles outlined in AUP 32 provide sound guidance. AUP 32 is not mandatory, however, and the Working Party believes that where total fees in the financial reporting period paid by the audit client or group of clients exceeds 15 per cent of the gross fees of a practice, there should be detailed consideration and documentation on the relevant audit file of the implications for independence and this document should be available for review in the normal quality review process.