ICAI has made this announcement on 11.05.2020 relating to an issue raised in revised code of ethics which is as under:
Sub. : Clarification on Fees from a single client
As the members are aware, the revised Code of Ethics will come into effect w.e.f 1st July, 2020.
Some members have expressed their concern on one of the provisions contained in Paragraph R410.4 of the Volume-I of revised Code of Ethics on measures for addressing self-interest threats resulting from dependence of Fees from a single client.
It may be clarified that there is NOT a bar in the revised Code of Ethics on acceptance of more than 15% fees from a single client. There is only requirement of disclosure , and taking safeguards prescribed therein, if the total gross annual professional fees from the audit client and its related entities represent more than 15% of the total fees received by the firm expressing the opinion on the financial statements of the client for two consecutive years.
Accordingly, the Audit may be continued while taking safeguards as mentioned in the said Paragraph.
It may further be clarified that this rule would not apply in Case of audit of Government Companies, public undertakings, nationalized banks, public financial institutions or where appointments are made by Government; OR where the total gross annual fees of the Firm does not exceed five lakhs of rupees.
It may also be relevant to note that the rule applies ONLY where such Fees is received from an AUDIT CLIENT.
To read amended Volume 1 CLICK HERE.
To read amended Volume 2 CLICK HERE.
This article is just for information purpose and are personal views of the author. It is always advisable to hire a professional for practical execution. If you need assistance you can ask a question to our expert and get the answer within an hour or post a comment about your views on the post and also subscribe to our newsletter for latest weekly updates.