Page 363 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori

(CNO-PE.420) Safeguards: (Shortcut: In Sequence of Easy to Difficult)
(TR AP karo threats)
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Separate Teams: Separating teams when dealing with confidential matters to address self-interest threats.
Resourcing: Assigning additional time and qualified personnel to tasks when an engagement is accepted to
address self-interest threats.
Review: Having an appropriate reviewer, not part of the team, review the work or provide advice to address self-
review threats.
Another Firm: Involving another firm to perform or re-perform part of the engagement to address self-interest,
self-review, advocacy, familiarity, or intimidation threats.
Partners of Non-Assurance Services: Using different partners and teams with separate reporting lines for non-
assurance services to an assurance client to address self-review, advocacy, or familiarity threats.

(CNO-PE.440) Non-Compliance with Laws and Regulations (NOCLAR)
Non-compliance Definition: Non-compliance refers to actions or inactions, intentional or unintentional, that
contravene current laws or regulations.
Professional Responsibility: Professional accountants may encounter non-compliance with laws and
regulations (NOCLAR) while providing services to a client or carrying out activities for an employer. These
instances can be actual or suspected. (If explain what are responsibilities in such circumstances)
Perpetrators: Non-compliance can be committed by the client, the accountant's employing organization, or
TCWG, Management, Employee of Client/Employing Organisation.
Personal Misconduct: The Revised Code of Ethics does not address personal misconduct unrelated to business
activities, nor non-compliance by parties not specifically mentioned in the NOCLAR definition.
As per IESBA, following examples would be covered in NOCLAR: - (Shortcut: ask SBi under FM DEPT)
▪ Securities markets and trading
▪ Banking and other financial products and service
▪ Fraud, corruption and bribery
▪ Money laundering, terrorist financing and proceeds of crime
▪ Data protection
▪ Environmental protection
▪ Public health and safety
▪ Tax and pension liabilities and payments
Objective of NOCLAR
No Ignorance: The NOCLAR framework ensures that professional accountants cannot ignore suspected or
Actual non-compliance.
Awareness: The NOCLAR framework enhances the awareness and understanding of professional accountants
regarding their legal and regulatory obligations when encountering NOCLAR.
TCWG & Management Role: It emphasizes the responsibilities of management and those in charge of
governance to prevent, detect & Correct non-compliance.

(CNO-PE.460) Some important facts about NOCLAR are given below:

Not responsible for Compliance or Investigation: The accountant is not required to investigate or ensure
complete compliance. NOCLAR applies when a professional accountant encounters or is made aware of non-
compliance or suspected non-compliance while providing a professional service.
Expertise (No Extreme): Accountants are expected to apply their knowledge and expertise, and exercise
professional judgment. They are not expected to have a greater understanding of laws and regulations than what
is required for the engagement. Determining non-compliance is a matter for courts or other adjudicative bodies.
Exclusions (Non Applicability): NOCLAR does not cover matters that are clearly inconsequential or related to
personal misconduct in the client's business activities.
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