Dennis Cooper CPA has been appointed as a junior auditor of Convergence Accounting Limited (CAL). One of his first tasks is to review the firms audit clients to ensure that independence requirements of APES 110 (Code of Ethics for Professional Accountants) are being met. His review has revealed the following:

(b) MHP Limited is a listed mining and energy company. Ross Taplin CPA is an audit partner at CAL but is not assigned to the MHP audit. Rosss wife Rosie was recently gifted significant units in a managed investment fund from her uncle. In its product disclosure statement, the fund disclosed that MHP Limited was among its top 10 shareholdings.

(c) Watson Partners (WP) is a law firm. CAL has performed the audit of WPs solicitors trust account for many years. The two firms are considering on combing their collective expertise in the luxury small ship cruises industry to set up a one-stop shop for small ship luxury cruise dealers. The firms are hoping that the new business capitalizes on the profile of the two firms to woo luxury small ship cruise dealers away from their current advisors.

(d) The now retired founding partner of CAL, Mr. Thompson, has long operated a small proprietary company (not a Public Interest Entity) through which he and his brothers own several investment properties. CAL has performed the annual audit (as per the companys constitution) for the past two years. In addition, it also processes the journal entries prepared by Mr. Thompson, extracts the trial balance and prepares the financial report.

Required: For each of the independent situations above, and using the conceptual framework in APES 110 (Code of Ethics for Professional Accountants), answer the following questions:

1. Identify potential threat(s) to independence & recommend safeguards (if any) to reduce the independence threat(s) identified.

2. Provide an objective assessment of whether audit independence can be achieved