Steven Cahan CPA has been appointed as a junior auditor of Brendan & Brendan Accounting Solutions (BBAS). One of his first tasks is to review the firms audit clients to ensure that independence requirements of APES 110 (Code of Ethics for Professional Accountants) are being met. His review has revealed the following:

Norman Jones CA is an audit senior at BBAS. Norman has been currently assigned to the audit of Premier Cruises Limited (PCL). Norman is planning to enter a business venture (Luxury Auto) with the CFO of PCL, whereby they are both equal partners in a business retailing luxury motor vehicles. Norman has informed Stephen that this will not be a problem since the two entities (PCL and Luxury Auto) are in different non-competing industries.

For each of the independent situations above, and using the conceptual framework in APES 110 (Code of Ethics for Professional Accountants), answer the following questions:

1. Identify potential threat(s) to independence & recommend safeguards (if any) to reduce the independence threat(s) identified.

2. Provide an objective assessment of whether audit independence can be achieved.