Question 4 a) To help improve corporate governance within a company, the company may establish an audit committee. Required Explain how an audit committee can be of benefit to both the internal and external auditors. (4 marks) b) You are an auditor manager of Pearson and Associates. Your audit firm recently became the auditors of Last Call, a telecommunication company. The management of Last Call is expectant that your firm with its expertise in tax matters will assist them in resolving an ongoing dispute with the Tax Authorities regarding an additional tax assessment which originated two years ago. The audit partner is pleased with the win of this new client as he sees the opportunity to gain audit experience in this industry. To ensure they remain the auditors for at least the next three year, the audit partner is proposing no fee increases for that period. The management of Last Call has offered all members of the audit team, the latest iPhone, a gesture it makes to all its major suppliers. The audit firm is also considering using Last Call as its service provider for the closed user group plan it wishes to implement for all audit mangers to partners of the firm. Required (1) Identify and give FOUR specific examples of ethical threats which may affect the independence of Pearson & Associate's audit of Last Call. (4 marks) (ii) For each threat identified in part (i), explain how it may be reduced. (4 marks)