George Larkham (George) works as an audit partner at a mid-tier firm of Chartered Accountants, and is in the process of finalising the audit of the financial report of Rainbow Resources Limited (Rainbow Resources) for the year ended 31 December 2016. George has been approached by the companys managing director with the proposal to process a journal entry to recognise an expense and a provision at 31 December 2016: Debit Credit Heavy maintenance expense 1,500,000 Provision for heavy maintenance expense 1,500,000 The managing director explains to George that he expects larger expenditure on heavy maintenance will be incurred in the 2018 financial year and it is prudent to recognise part of the expenditure in the 2016 financial year. George advises the managing director that the proposed entry does not conform with Generally Accepted Accounting Principles as in the 2016 financial year Rainbow Resources does not have a legal or constructive obligation to undertake the heavy maintenance in the 2018 financial year. As such, given the materiality of the expense and provision, if it is recognised, George will be required to modify the audit opinion. The managing director advises George that should he modify the audit opinion his firm will be removed as auditors in the 2017 financial year. George is worried by this as the audit fees generated from the audit of Rainbow Resources are material to the total fees which he generates for his firm. George is considering the managing directors proposal and allow the journal entry to be processed to recognise an expense and a provision at 31 December 2016 without modifying the audit opinion. Required: (a) Provide three reasons why it is important for George to behave in an ethical manner. (b) Identify and explain the relevant fundamental ethical principles related to George's situation and the threats to these principles.