QUESTION 3 (15 Marks)

For each situation below identify the threat and one fundamental principle that is comprised.

a) An auditor has shares in a company which is an audit client of theirs.

b) An accountant has compiled the financial statements for a client and was requested to also audit the statements.

c) The financial director of Baboo Ltd is very aggressive and dismissive of the audit function and audit team

d) A chartered accountant values a clients shares and then leads the negotiations on the sale of the clients company

e) The chartered accountant fails to report a fraud at a client because the perpetrator is a close friend and he is sympathetic to the interest of his friend.