APES 110 Code of Ethics for Professional Accountants identifies five key threats to audit independence. Ten examples of threats to audit independence are listed below. Required: Complete the following table by classifying each threat as either a self-interest, familiarity, or intimidation threat. advocacy, self-review, (8 marks) Threats to Audit Independence An audit team member is eligible for a bonus, and the value of the bonus is directly affected by the audit member's decision. An audit partner accepts two tickets to the AFL Grand Final from a client. The external auditor prepared the financial statements and then audited the same statements. v. An audit firm and their client agree that the audit firm would receive 20% of any tax savings resulting from tax advice provided by the audit firm. v. The audit firm has an undue dependence on total fees from one client vi. The audit partner acts as an expert witness in support of the client in a dispute with a third party. vil. Santina Limited has been audited by the same auditor for the past ten years. vii. The audit firm is being pressured by the client to reduce the extent of audit work to help reduce audit fees. (1) Self-interest (2) Self-review (3) Advocacy (4) Familiarity (5) Intimidation Question 1 continued over next page Question 1 continued (b) Why is it important for the auditor to be seen as (2 marks) independent?