A large audit client has not paid its audit fees for two years. The client has grown rapidly and is experiencing cashflow problems as a result. The client has offered shares in the company to each of the partners in Majova in lieu of payment for the value of the fees owed. The annual audit fee is substantial in relation to other clients of the firm.

State whether the situation would give rise to a threat/(s) to the auditors independence. Categorise the threat/(s). Explain why you believe independence would be threatened or if you believe independence has not been threatened you need to give reasons for why