auditing wuestion

Peethon, which was a small company few years ago, has now grown to a large well-established business and intends to soon issue shares on the stock market. Due to the lack of accounting background, the founders of Peethon hired Chase \& Monroe (CM), a two-partner accounting firm, for its accounting, preparation of financial statements, and also its annual statutory audit. CM has also provided some advisory service in relation to Peethon's internal control systems. Brad Chase, the senior partner of CM has noticed that most of their clients are small and medium sized companies, but, because Peethon has grown so fast over the last few years, it now accounts for 25% of CM s gross income from fees. Based on this case, answer the following questions: (a) Discuss in detail the extent to which the IAS consider it acceptable and appropriate that CM have provided Peethon in the past three services - preparation of financial statements, statutory audit, and advice on internal controls. (4 marks) (b) What are all the threats to CMs objectivity and independence? What safeguards can be put in place to minimize each of these threats. ( 3 marks)