You are an audit manager at Tick and Bop LLP and are planning the audit of Lotusbank, a digital bank that provides a range of financial services including mortgages. Of all the Canadian digital banks, Lotusbank offers the most products for customers, as well as impressive interest rates that appeal to people in different financial situations. Your firm has audited Lotusbank for four years and the company’s year-end is September 30, 2020. As part of your independence review, you noted the following:
a. A number of the audit team members currently bank with Lotusbank, and two team members have mortgages with the company.
b. Tick and Bop’s taxation department also provides services to Lotusbank. The taxation department has been approached by Lotusbank to represent Lotusbank in negotiations to resolve some outstanding issues with the CRA (Canada Revenue Agency). The fees quoted for the taxation engagement are substantial.
c. The CFO informed the audit engagement partner that when the audit is complete, she plans to invite the whole audit team to watch a Toronto Raptors game in Lotusbank’s corporate box. The event will include a catered luxury meal.

REQUIRED
For each situation, perform the following analysis:
a. Indicate whether or not the facts present a threat to independence.
b. If it is an independence threat, indicate the type of independence threat.
c. If it is an independence threat, explain why the threat would or would not impair the CPA’s professional judgment or objectivity.
d. For each situation where you have concluded the CPA’s judgment or objectivity would be impaired, recommend a safeguard to reduce the threat to an acceptable level.