| 15 | The audit firm of a Small Entity is not required to comply with APB Ethical Standard 5, paragraphs 104 and 145(b) provided that it discloses the fact that it has applied this Standard in accordance with paragraph 24. |
| 16 | APB Ethical Standard 5, paragraph 104 provides that 'the audit firm shall not undertake an engagement to provide tax services to an audited entity where this would involve acting as an advocate for the audited entity, before an appeals tribunal or court in the resolution of an issue: |
| (a) | that is material to the financial statements; or |
| (b) | where the outcome of the tax issue is dependent on a future or contemporary audit judgment'. |
| Such circumstances may create an advocacy threat which it is unlikely any safeguards can eliminate or reduce to an acceptable level. |
| 17 | APB Ethical Standard 5, paragraph 145(b) provides that 'the audit firm shall not undertake an engagement to provide restructuring services in respect of an audited entity where the engagement would require the auditor to act as an advocate for the entity in relation to matters that are material to the financial statements'. |
| 18 | Such circumstances may create an advocacy threat which it is unlikely any safeguards can eliminate or reduce to an acceptable level. |
| 19 | Where an audit firm auditing a Small Entity takes advantage of the dispensation in paragraph 15, it discloses the fact that it has applied this Standard in accordance with paragraph 24. |
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