Conceptual Framework … What Is It And How To Use It As of January 24,

Conceptual Framework What Is It And How To Use It As of January 24, 2014 #

What is a Conceptual Framework Nothing on Point in the Code Old Thinking Relationship or circumstance must be permitted Revised Thinking Apply the conceptual framework Requires professional judgment Reasonable Third Party - For example, if the situation involves a staff person often an effective safeguard is: - The staff's removal from the engagement - Additional review of the staff’s work #AICPA Banks

Steps of the Conceptual Framework Step 1 Identify Threats No Threats Proceed Step 2 Evaluate Threats Threats not Significant Proceed Threats Not Acceptable Level Stop Step 3 Identify Safeguards Existing New Step 4 Evaluate Safeguards Threats at Acceptable Proceed

Conceptual Framework - Case Study Characters Anthony “Auto” – Owner of Used Car Dealership Evan – Owner of a CPA Firm (and Anthony’s brother) Robert – Owner of Auto Supply Store and über mechanic (childhood friend of Auto and Evan) Situation Can Evan perform reviews for Robert’s store? #AICPA Banks

Polling Question: Conceptual Framework When using the conceptual framework, if a threat is significant you should: A. Not perform the attest engagement B. Discuss the threat with those charged with governance C. Apply safeguards that eliminate or reduce the threat to an acceptable level D. Adopt policies and procedures that are designed to monitor the quality control of the attest engagement #AICPA Banks

Polling Question: Safeguards If Evan implemented the same safeguards, could he perform an annual review for Auto’s used-car dealership? A. Yes B. No #AICPA Banks

Summary & Questions #AICPA Banks