1. Sam is in charge of the audit of Olly Design. Several young assistant accountants are working with Sam on the engagement, and several are avid wind-surfers. Olly Design owns two chalets on Surfers Beach, which it uses to entertain clients. The financial comptroller of Olly Design has told Sam that he and his audit staff are welcome to use the chalets at no charge any time when the chalets are not already in use.

Required:

1. Explain and elaborate on the code of ethics governing the conduct of auditors.

[10 Marks]

2. If Sam were to accept the offer, how would Sams independence as an auditor be affected. [5 marks]