Write an answer to the situation described below addressing the required criteria (i.e. 1 & 2) in each independent case. You may use a tabulated format if helpful having Threats, Safeguards and Objective Assessment as column headings.

Christopher Brown has been appointed as a junior auditor of Apex Chartered Accountants (ACA). One of his first tasks is to review the firms audit clients (all public interest entities) to ensure that independence requirements of APES 110 (Code of Ethics for Professional Accountants) are being met. His review has revealed the following:

1. (b) Michael, FCPA is an engagement partner at ACA. ACA has recently been appointed the auditor of Awesome Ferries Limited (AFL). AFL has been providing ferry services in Perth for the past 15 years. Michael has received a request to participate in the current years audit engagement of AFL. Michaels financially independent daughter, Serena has a shareholding in AFL.

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