PMB Security Ltd has been an audit client of Maitland Partners for the past 15 years. PMB Security Ltd, an ASX listed company, is based in Roma where it manufactures high-tech security systems. PMB Securitys end of financial year is 30 June, and Maitland Partners is preparing to commence the 2019 audit.

Caryn Marks has been the engagement partner on the PMB Security Ltds audit for the past five years. Caryn is a specialist in the security/IT industry and intends to remain as review partner when the audit is rotated next year to a new audit partner (Scott Turner, who is to be promoted to partner to enable him to sign-off on the audit).

In September 2018, PMB Security Ltd installed a new off-the-shelf inventory costing system. This system replaced a system that had been developed in-house, as the old system could no longer keep up with the complex and detailed manufacturing costing process that provides tender costings. The old system also had difficulty with the companys broader reporting requirements.

PMB Security Ltds information technology (IT) department, together with the consultants from the software company implemented the new manufacturing costing system. Key operational staff from PMB Security Ltd, together with consultants from the software supplier were significantly engaged in the selection, testing, training and implementation stages. Several customized modifications were made and therefore PMB Security has asked Maitland Partners to provide an estimate of the valuation of the software system.

PMB Security Ltd has a small internal audit department which reports to the Chief Financial Officer (CFO), Bruce Tegan, who is an ex-partner of Maitland Partners. Tegan took up the appointment as CFO for PMB Security Ltd in November 2018, after spending two years in early retirement. During his last year at Maitland Partners, Tegan had been the review partner on the 2016 PMB Security Ltd audit. Tegan does not hold any financial interest in Maitland Partners, having been paid out his capital on retirement. Further, Tegan has not remained in contact with any of the remaining partners since his departure from the audit firm, with the exception of Scott Turner, whom he had mentored in his early career.

Question:

You are required to identify and discuss any issues that could give rise to potential threats to independence for Maitland Partners in their audit of PMB Security Ltd. (Australia)