Question 2 (8 marks)

For the following three scenarios, perform the following analysis:

a.Indicate whether or not the facts present a threat to independence

b.If it is an independence threat, indicate the type of independence threat.

c.Provide an explanation for your conclusion as to why or why not the facts in the scenario would impair the CPA's professional judgment or objectivity.

d.If there is an independence threat what safeguard could they put in place to address the threat of independence.

Scenario 1

Microservices Ltd. has been audited by the public accounting firm of Bruce Penn LLP.It was decided by Bruce Partner, partner, that the prior year's time budget was a reasonable estimate to complete this year's audit.Although more work was anticipated to completethis year's audit, Bruce Partner was confident that the audit team's efficiency would be able to compensate for the extra time needed to do the audit.The partner had also promised Microservices Inc.that the firm would not increase the audit fee for this year.