The following are examples of situations in which an audit firm might be faced with threats to its independence.

For each example

• indicate which of the 6 threats to independence noted in the ethical code the situation is best illustrated by the scenario
• Explain why the situation is a risk
• Explain what if any steps the audit firm could take to mitigate the risk.

1. The audit firm has been asked to underwrite its clients shares in relation to a proposed flotation

2. The board of directors does not contained a qualified finance professional and the company asked the audit firm to prepare the financial statements