Ethics The objectivity of external auditors may be threatened or appear to be threatened in the following circumstances: a) The audit firm has been the external auditor of the client for the past 10ars b) The audit firm provides non-audit services to the audit client c) The audit firm is heavily financially dependent on one significant client d) The audit firm, its partners or staff, have a financial interest in the audit client e) The audit partner has been invited to sit on the board of directors. Requirement: 1) Define Objectivity and Independence as they apply to an auditor and briefly explain their interrelationship. Learners should provide examples to demonstrate their understanding. (10 Marks) 2) Discuss the importance of auditor independence in the auditor-client relationship. (10 Marks) 3) For each of the five circumstances (a) -(e) above, explain the type of threat it creates and analyse the possible consequences of such threats to the conduct and outcome of the audit. (50 Marks) 4) Recommend the appropriate safeguards to be implemented by the audit firm to reduce the threat to the auditors' objectivity for each of the above circumstances (a) - (e).