Explain the most relevant threat to independence for kfp

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Questions - Featherbed Surf & Leisure Holidays Ltd. (Featherbed) is a resort company based on Vancouver Island. Its operations include boating, surfing, fishing, and other leisure activities; a backpackers' hostel; a family hotel; and a five-star resort. Justin and Sarah Morris own the majority of the shares in the Morris Group, which controls Featherbed. Justin is the chairman of the board of directors of both Featherbed and the Morris Group, and Sarah is a director of both companies as well as the CFO of Featherbed. The entire group of companies prepare their financial statements in accordance with ASPE.

In February 2020, Justin Morris approached your audit firm, KFP Partners (KFP), to carry out the Featherbed audit for the year ended June 30, 2020. Featherbed has not been audited before, but this year the audit has been requested by the company's bank and a new private equity investor group that has just acquired a 20 percent share of Featherbed. You know that one of the partners at KFP went to school with Justin and has been friends with both Justin and Sarah for many years.

a) Explain the most relevant threat to independence for KFP in accepting the audit of Featherbed.

b) Explain one relevant and practical safeguard that KFP could implement to reduce this independence threat.

Reference no: EM132681945

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