In light of the Ms. Archana’s observation RE-DRAFT a policy to identify and evaluate possible threats to independence considering SQC 1?

L & V LLP establishes procedures to identify and evaluate possible threats to independence and objectivity, including the familiarity threat that may be created by using the same senior personnel on an audit or attest engagement over a long period of time, and to take appropriate action to eliminate those threats or reduce them to an acceptable level by applying safeguards. Following is an illustrative independence policy that may be drafted by L & V LLP considering the requirements of SQC 1: Requiring the engagement partner to provide relevant information about client engagements, including the scope of services, to enable him to evaluate the overall impact, if any, on independence requirements. Providing training to partners and professional staff on what constitutes threats to independence and the nature of safeguards that may be taken to eliminate or reduce the threats to an acceptable level. Such training should include ICAI’s responses to matters dealing with ethical conduct. Accumulating and communicating relevant information to appropriate personnel so that the following can occur: The firm, the engagement partner, firm personnel and others, if any, can readily determine whether they satisfy independence requirements. The firm can maintain and update information relating to independence. The firm and the engagement partner can take appropriate action regarding identified threats to independence, in consultation with the independence and ethics partner. Requiring personnel to promptly report circumstances and relationships that create a threat to independence and independence breaches of which they become aware to the independence and ethics partner so that appropriate action can be taken. Establishing criteria to determine the need for safeguards for engagements where the following have taken place: The firm’s monitoring procedures or peer review has identified weaknesses in previous years. The same senior personnel have been used for five years or more on an audit or attestation engagement. The client pressurizes the engagement partner to take a particular position or an accounting or auditing issue. Promptly communicating identified breaches of these policies and procedures, and the required corrective actions, to the following personnel: The engagement partner who, with the firm, needs to address the breach. The independence and ethics partner who should report the breaches to the managing partner for necessary action. Other relevant personnel in the Firm and those subject to the independence requirements who need to take appropriate action. Requiring the engagement partner and the other individuals referred to in the previous list to confirm to the firm that the required corrective actions have been taken. Having the independence and ethics partner, or an individual designated by him, periodically review unpaid fees from clients to ascertain whether any outstanding amounts impair the firm’s independence. Establishing additional procedures that provide safeguards when the firm performs audit or other attest work for a) significant clients or b) clients at which partners or other senior personnel are offered key management positions or have accepted offers of employment. Documenting the threats and the safeguards applied to eliminate or reduce them to an acceptable level for each instance.