Write answers to each of the five (5) situations 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.

Tom Hardy has been appointed as a junior auditor of Awesome Chartered Accountants (ACA). 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:

(a) Sheraton Motels Ltd (SML) is a chain of fifteen motels operating in Western Australia. ACA performs audit work for SML. This is the second year that ACAs audit fee from SML will comprise of around 17% of total ACAs audit fee revenue.

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. (5 marks) 2. Provide an objective assessment of whether audit independence can be achieved (5 marks) (Total 10 Marks)