Question

apply safeguards for threats arising from the following

1- loans and guarantees

2- fees and pricing

3- close business relationship

4- employment

4- actual & threatened litigation

Answer 1

Loans iand iguarantees

A iLoan ior iguarantee iof ia iloan, ifrom ian iassurance iclient ithat iis ibank ior ia isimilar iinstitution, ito ia imember iof ithe iassurance iteam ior itheir iimmediate ifamily iwould inot icreate ithreat ito iindependence iprovided ithe iloan ior iguarantee iis imade iin ithe inormal ilending iprocedures iand iterms. iExamples iof isuch iloans iinclude ihome imortgage, ibank ioverdraft, icar iloans iand icredit icard ibalances.

If ia imember iof ithe iassurance iteam imakes ia iloan ior iaccepts ia iloan ifrom ian iassurance iclient, iwhich iis inot ia ibank, ithe iself-interest ithreat iis icreated.

A iguarantee iis ia ilegal ipromise imade iby ia ithird iparty i(guarantor) ito icover ia iborrower’s idebt ior iother itypes iof iliability iin icase iof ithe iborrower’s idefault. iLoans iguaranteed iby ia ithird iparty iare icalled iguaranteed iloans. iThe iguarantee ican ibe ilimited ior iunlimited. iAn iunlimited iguarantee iimplies ithat ithe iguarantor iwill icover ithe ifull iamount iof iliability, iwhile iin ia ilimited iguarantee; ithe iguarantor iwill icover ionly ia iportion iof ithe iliability.

fees iand ipricing

A ifee iis ia ifixed iprice icharged ifor ia ispecific iservice. iFees iare iapplied iin ia ivariety iof iways isuch ias icosts, icharges, icommissions, iand ipenalties. iFees iare imost icommonly ifound iin iheavily itransactional iservices iand iare ipaid iin ilieu iof ia iwage ior isalary.

In isome icases, ia ifee iis icharged iwhen ian iindividual ihires ia ibusiness ito ido ia ispecific itask, isuch ias icleaning ia ihouse ior ifiling itaxes. iThis itype iof ifee iis ioften ithe imost itransparent iand itransactional, ias iit irepresents ipayment ifor ithe isole ireason ia ifee-charging ibusiness iwas ihired. iExamples iof itransactional ifees iinclude imortgage ifees iand ifees ifor iwiring imoney.

Sometimes ithere iis imore ithan ione ifee icharged ifor ia iservice i(i.e., ibuying ia iplane iticket ifor iX iamount iof imoney, ibut igetting ihit iwith iluggage ifees iand itravel ifees).

There iare igovernment i(local iand ifederal) ifees iconnected iwith iobtaining ilicenses, isuch ia idriver’s ilicense ior ia ipassport.

Fees ican iadd iup ifast, ifor iexample, icredit icard icompanies ioften icharge ihefty ifees ifor ilate icharges.

Pricing irefers ito ithe idecision-making iprocess ithat igoes iinto iestablishing ia ivalue ifor ia iproduct ior iservice. iThere iare imany idifferent istrategies ithat ia ibusiness ican iuse iwhen isetting iprices, ibut ithey iare iall ia iform iof ipricing. iThe iprice ithat's iset iduring ithe ipricing iprocess iis iwhat ithe icustomer iwill ipay ifor ithat iproduct ior iservice.

There iare imany ipricing imethods, ibut ifor ithe imost ipart, ithey iall iboil idown ito isome ivariant iof ithree igeneral iapproaches.

Some imarkets ioffer ia imix iof ipricing istrategies. iFor iexample, ieBay ioffers iwholesalers ia imarket iwhere ithey iset ithe iprice, ioften ibased ion ithe iproduct's icost. iAt ithe isame itime, ibecause imany ibuyers iand isellers iare iactive ion ieBay, imany isuccessful isellers iset iprices icompetitively. iElsewhere ion ieBay, isellers imay iask ifar imore ifor ia iused iproduct ithan ithe ioriginal iretail iprice—such ias iold, iout-of-print ivideo igames—simply ibecause ithe idemand ijustifies iit.

close ibusiness irelationship

A iclose ibusiness irelationship iincludes ia ipartner, iemployer, ior iclient

Business ito ibusiness i(B2B)

The ihighest-priority iB2B irelations iare itypically ithose ieither iup ior idown ithe isupply ichain, ias ioperations iare igoing ito ibe idependent ion isuch irelationships i– ia icosmetics icompany icould inot ido ibusiness iwithout iits iupstream isuppliers ior idownstream iretailers. iBut iwhile inot ievery ibusiness ihas isuch ivertical isupply ichains, ihorizontal inetworks ialso iprovide iopportunities ifor ipartnership.

Business ito icustomer i(B2C)

Quid ipro iquo ireferrals ican ialso ihave ipositive iripple ieffects iin ianother itype iof ibusiness irelation i– icustomers. iBusinesses ithat iput ithe icustomer's ineeds iover ian iimmediate isale iby ireferring ithem ito ia ibetter-fitting icompetitor iare imore ilikely ito ibe iperceived ias itrustworthy, iwhich iwill ipay idividends.

Employment

Employment iis ia irelationship ibetween itwo iparties, iusually ibased ion icontract iwhere iwork iis ipaid ifor, iwhere ione iparty, iwhich imay ibe ia icorporation, ifor iprofit, inot-for-profit iorganization, ico-operative ior iother ientity iis ithe iemployer iand ithe iother iis ithe iemployee. iEmployees iwork iin ireturn ifor ipayment, iwhich imay ibe iin ithe iform iof ian ihourly iwage, iby ipiecework ior ian iannual isalary, idepending ion ithe itype iof iwork ian iemployee idoes ior iwhich isector ithey iare iworking iin. iEmployees iin isome ifields ior isectors imay ireceive igratuities, ibonus ipayment ior istock ioptions. iIn isome itypes iof iemployment, iemployees imay ireceive ibenefits iin iaddition ito ipayment. iBenefits ican iinclude ihealth iinsurance, ihousing, idisability iinsurance ior iuse iof ia igym. iEmployment iis itypically igoverned iby iemployment ilaws, iorganization ior ilegal icontracts.

Threatened iLitigation i(excluding iunasserted iclaims)

i i i i[Ordinarily ithe iinformation iwould iinclude ithe ifollowing:

1) the inature iof ithe ilitigation,

2) the iprogress iof ithe icase ito idate, i

3) how imanagement iis iresponding ior iintends ito irespond ito ithe ilitigation i(for iexample, ito icontest ithe icase ivigorously ior ito iseek ian iout-of-court isettlement), iand

4) an ievaluation iof ithe ilikelihood iof ian iunfavorable ioutcome iand ian iestimate, iif ione ican ibe imade, iof ithe iamount ior irange iof ipotential iloss.] i

Please ifurnish ito iour iauditors isuch iexplanation, iif iany, ithat iyou iconsider inecessary ito isupplement ithe iforegoing iinformation, iincluding ian iexplanation iof ithose imatters ias ito iwhich iyour iviews imay idiffer ifrom ithose istated iand ian iidentification iof ithe iomission iof iany ipending ior ithreatened ilitigation, iclaims, iand iassessments ior ia istatement ithat ithe ilist iof isuch imatters iis icomplete.