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FRC reminds audit firms of approaching deadline for terminating or amending contracts for tax services provided on a contingent fee basis

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26 Jun 2014

The Financial Reporting Council (FRC) has issued a reminder to audit firms that the deadline for terminating or amending contracts for tax services provided on a contingent fee basis is 31 December 2014.

Changes to Ethical Standards for Auditors, which became effective in December 2010, prohibited firms from undertaking any tax services on a contingent fee basis for companies that they audit where the outcome is dependent on the proposed application of tax law which is uncertain or has not been established.

Recognising that firms were likely to have a number of uncompleted engagements of the nature described above, the revised Ethical Standards contained a transitional provision permitting firms to continue with such engagements until the earlier of the completion of the engagement or 31 December 2011. In November 2011, following consultation, the transitional period was extended to 31 December 2014.

The FRC reminds audit firms that there will be no further extension of this transitional provision and that to remain compliant with the Ethical Standards for Auditors they will need to take the appropriate action by 31 December 2014.

The FRC press release can be accessed on the FRC website.

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