al Exam Acct 380- Requires Respondus LockDown Browser Time Left:5:54:03 Qasem Almousa: Attempt 1 Question 47 (10 points) Threats to independence You, CPA, work for the public accounting firm Rufus and Reid, LLP. During your review, you note the following issues. Required: Answer each question listed in table below for each item. Scenario Type of threat Is this threat If the threat is significant? significant, are there safeguards to reduce threats to an acceptable level? a) Six months ago, one of the firm's partners served as an expert witness at a hearing where Kaledon Inc. (a public company) was being sued for non-performance of contract. The partner testified at the request of Kaledon with respect to the fair value of an asset provided by Kaledon to the plaintiff. The asset was valued at $5 million. Several similar assets are still on hand and recorded in Kaledon's books. Kaledon's management was impressed with the partner's work and has approached him for a quote on audit services for this year. b) The firm recently hired Ninan as a new audit manager. Ninan's wife owns 5% of the common shares of Tempo Corporation, an existing audit client. c) The minutes from your audit team debriefing meeting for last year's audit of Saltzbury Shutters indicated that several audit staff members had difficulty talking to the company's controller. One audit team member noted: "I had difficulty following a complicated walkthrough and when I asked the controller for clarification, she made me feel stupid and threatened to tell my supervisor." d) The firm provides bookkeeping services to non-assurance clients. At the beginning of the current year, EdgeMax Inc., a private company for whom the firm performs audit engagements, suddenly lost its accounting clerk. The firm sent Suzanne, a junior staff member on the audit engagement team, to do the bookkeeping and payroll for three weeks while EdgeMax found a new staff member. Format B IU. . .. A/ SAMSUNG MENU/UD SOURCE/C AUTO