Question 1

Part (a)

Identify and discuss the threats to auditor objectivity or other principles in the IESBA Ethical Code and recommend appropriate actions to be taken by the auditor based on the circumstances above.

Part (b)

Explain any threats to the principles of good corporate governance evident from the scenario, including any important links to the potential reporting outcomes.

Pegee plc is a construction company listed on the London Stock Exchange. It has been listed for over twelve years. Pippa Evans is an audit partner at major firm Leopard LLP and has recently taken over as reporting partner after a partner rotation change following completion, approval and issue of the 2018 annual financial statements. Coincidentally Ravi Khan a Chartered Accountant has taken over as financial director at the same time. Ravi is known as a 'hands on' leader and he attends audit committee meetings and where he is able monthly project team meetings for construction contracts. Ravi has brought in several members of his finance team from his previous company that is a client of Leopard LLP, which Pippa had partner in charge responsibility for until 2018. Ravi has already made his views known regarding what he sees as a required focus on financial market requirements for shareholder returns at an acceptable risk.| The Pegee plc board have brought Ravi in to pursue a strategy of debt reduction and to improve working capital management. At his interview Ravi impressed the board with his analysis of Pegee plc's weaknesses and risks when he commented upon what he saw as risks associated with low operating margins and gearing issues. Ravi also showed insight in recommending operational changes that were required in project management processes to improve project quality control and estimation procedures. Leopard LLP undertakes both tax advisory and non-statutory assurance work for Pegee plc and out of the total fee some 23% relates to non-audit services. This has been approved by the audit committee and Ravi is keen to use the firm's tax and assurance expertise in the future. He intends to disband the current internal audit function and put the work out to tender with the major firms in order to shift work