Question 3-Independence (7marks)

A senior partner in a large incorporated accounting firm has 400 shares in a large client's company. Whilst this ownership stake is considered an insignificant part of the partner's total share portfolio, the firm has strict requirements about equity investments in clients based on s307C of the Corporations Act and the APES 110 Code of Ethics for Professional Accountants.

Required:

1. Has the partner violated the independence requirements of the firm? Discuss (3 marks)
2. Explain whether the ownership is likely to affect the partner's independence in fact.

(4 marks)