Reference no: EM133174002

Question - One of your major clients, Fruity Juices Ltd, has talked to you about a consulting engagement next year for you to do a complete review of the adequacy of the entity's quality controls over the production of its fruit juices. However, the managing director has indicated that some of the Board are concerned about you taking up too much of their staff's time asking unnecessary questions. Therefore, he has suggested that your chances of getting the engagement will be significantly improved if you keep your questions of staff to a minimum during the current audit.

You have audited Apex Ltd, a stable engineering firm, for several years. At the start of this year, the finance director, Carol Ling, retired after 10 years with company and was replaced by Eric Lay, a long-time friend of the audit manager Bruce Li, who was best man at Eric's recent marriage.

Required - For each of the independent situations above:

(a) Identify the type of potential threat to independence. Justify your answer.

(b) Explain what safeguards, if any, that could be implemented to reduce the independence threats.

(c) Assess whether audit independence can be achieved.