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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Code of Ethics for Professional Accountants

Lakeside LLP audits Orion plc, a public interest entity (PIE). Orion asks Lakeside to prepare the routine accounting records and financial statements from the trial balance that Orion's staff will supply. Which response is most consistent with the IESBA Code?

Lakeside should decline. For a public interest entity audit client, the IESBA Code prohibits preparing accounting records or financial statements because of the self-review threat, and the routine and mechanical relaxation available for non-PIEs does not apply.

  1. ADecline, because preparing accounting records and financial statements for a PIE audit client is generally prohibited as it creates a self-review threatCorrect
  2. BAccept, provided management approves the statements and takes responsibility for them, since this safeguard applies equally to PIEs
  3. CAccept, provided a different partner prepares the statements
  4. DAccept, because the work is routine and mechanical, which is permitted for PIEs in all cases

Explanation

For PIE audit clients the Code does not permit the firm to provide accounting and bookkeeping services including preparing financial statements, except in emergency situations. The routine or mechanical relaxation applies to non-PIEs. Management approval or a separate partner does not remove the self-review threat for a PIE.

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