You are an audit manager of Pink Partners & Co (Pink) andare planning the audit of Golden Finance Co (Golden), a bankinginstitution which provides a range of financial services includingloans. Your firm has audited Golden for four years and thecompany’s year-end is 30 September 2015.

At the end of August, Golden’s financial controller left and thenew replacement is not due to start until approximately two monthsafter the year-end. The finance director, who is the sisterin-lawof the audit engagement partner, has asked if a member of the auditteam can be seconded to Golden for three months to act as thetemporary financial controller.

You are aware that a number of the audit team members currentlybank with Golden and two team members have significant loans owingto the company.

Pink’s taxation department also provides services to Golden.They have been approached by Golden to represent them innegotiations to resolve some outstanding issues with the taxationauthorities, for which the fees quoted, are substantial.

The finance director has informed the audit engagement partnerthat when the audit is complete, she would like the whole team toattend an evening watching the national football team play a matchfollowed by a luxury meal.

Required:

Using the information above:

(i) Identify and explain FIVE ethical threats which may affectthe independence of Pink Partners & Co’s audit of GoldenFinance Co; and

(ii) For each threat, explain how it might be reduced to anacceptable level