Solution-Identify two key threats to independence

Identify two key threats to independence

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Question - Soccer Balls Inc. (SBI) is a multinational wholesaler and retailer of sporting equipment based in Italy. On 1 September 2020, SBI established Hockey Pty Ltd (Hockey), a wholly owned subsidiary, in Brisbane.

Damon & Stephan Salvatore (DSS), an audit and accounting firm, provided taxation consulting advice to Hockey on the tax consequences of setting up in Australia.

As part of this tax consulting engagement, DSS recommended the implementation of a tax minimization scheme for Hockey. This scheme is the one that DSS uses for many of its clients, although it has not been approved by the Australian Taxation Office or tested in the courts. The effect of this scheme on Hockey's financial accounts is likely to be material.

The consulting engagement was completed in August 2030 and Hockey has not paid DSS all outstanding fees for the consulting work. DSS has now been approached to act as an auditor for Hockey.

Required -

(a) Identify two (2) key threats to independence that need to be considered before accepting the audit engagement. Justify your response.

(b) Identify three (3) practical safeguards that would mitigate each of the threats to independence identified.

Reference no: EM132930093

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Identify two key threats to independence

Reference no: EM132930093

Reference no: EM132930093

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