Hello can someone help me in this question by applying the requirements of APES

Question

Hello can someone help me in this question by applying the requirements of APES 110 to identify the threats and recommend safeguard to reduce threat and provide an objective assessment whether audit independence can be achieved for this scenario below.

Reign an assurance company has been asked to conduct the audit of Apple Company. However the accountant at Apple Company, Sam coppers is the son of one of the audit partner of Reign Mathieu coppers. Since of the close relationship of Sam and Mathieu, Reign Company will not include Mathieu in the audit team of Apple Company.

Explanation / Answer

Solution -

Threats may be created by a broad range of relationships and circumstances.

Threats fall into one or more of the following categories:

(a) Self-interest threat the threat that a financial or other interest will inappropriately influence the Member‘s judgment or behaviour.

(b) Self-review threat the threat that a Member will not appropriately evaluate the results of a previous judgment made or service performed by the Member, or by another individual within the Member‘s Firm or employing organisation, on which the Member will rely when forming a judgment as part of providing a current service.

(c) Advocacy threat the threat that a Member will promote a client‘s or employer‘s position to the point that the Member‘s objectivity is compromised.

(d) Familiarity threat the threat that due to a long or close relationship with a client or employer, a Member will be too sympathetic to their interests or too accepting of their work.

(e) Intimidation threat the threat that a Member will be deterred from acting objectively because of actual or perceived pressures, including attempts to exercise undue influence over the Member.

When an Immediate Family member of a member of the Audit Team is:

(a) A Director or Officer of the Audit Client.

(b) An employee in a position to exert significant influence over the preparation of the client‘s accounting records or the Financial Statements on which the Firm will express an Opinion,

or was in such a position during any period covered by the engagement or the Financial Statements, the threats to Independence can only be reduced to an Acceptable Level by removing the individual from the Audit Team. The closeness of the relationship is such that no other safeguards could reduce the threat to an Acceptable Level. Accordingly, no individual who has such a relationship shall be a member of the Audit Team.

The significance of the threat shall be evaluated and safeguards applied when necessary to eliminate the threat or reduce it to an Acceptable Level. Therefore, In the above case safeguards so that Audit Independence can be achieved include:

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