SCAQ Foundation ASF Practice Questions - SCAQ Foundation Assurance Examination Exam

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An audit firm agrees to accept an audit fee calculated as 5% of the audit client's reported net profit before tax. How does ISCA EP 100 view this arrangement?

It is strictly prohibited because contingent audit fees create an insurmountable self-interest threat. It is permissible provided the client's audit committee approves the arrangement in writing. It is permissible only if the percentage fee is disclosed in the audit report. It is permissible for non-listed private companies but prohibited for listed public companies.

Correct Answer:

It is strictly prohibited because contingent audit fees create an insurmountable self-interest threat.

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