Jewel plc (Jewel) Jewel is a UK listed company. Jewel appointed a new finance director and financial controller on 18 February 20X3 as the previous finance director and financial controller left the company in December 20X2. The directors of Jewel have requested that the prior year engagement partner, Linda Marcel, continues as engagement partner for the current year audit in order to safeguard the quality of the audit in light of the recent appointments. Linda has been the engagement partner for the previous five years. Lake Ltd (Lake) Lake has recently decided to engage an external tax adviser to look after all aspects of its tax affairs, and has requested that Toco LLP accepts the engagement for an annual fee of 768,000. The directors believe that Toco LLP will be able to provide a cost-effective service due to its cumulative knowledge of Lake's business gained through its provision of the external audit. Current services supplied by Toco LLP to Lake are the external audit and a recurring assurance engagement, with annual fee incomes of 865,000 and 219,000 respectively. Toco LLP's total annual fee income, excluding the proposed tax services for Lake, is 17.1 million. Carnival Ltd (Carnival) The financial controller at Carnival has been on long-term sick leave and the finance director has asked Toco LLP for help with finalising the accounting information in preparation for the year-end audit. He is particularly concerned about preparing estimates for the allowance for trade receivables and year-end warranty provision as none of his accounting staff has the appropriate experience. He has requested that Toco LLP help Carnival to prepare the accounting information, including the specific estimates mentioned. Requirements 2.1 Explain why objectivity and independence are important principles in the context of an external audit engagement. Outline how the Financial Reporting Council's Ethical Standard promotes independence and objectivity in the conduct of an external audit. (4 marks) 2.2 For each of the three situations outlined above, explain the threats to the objectivity and independence of Toco LLP and list the safeguards available to mitigate these threats.