You are an audit manager in Alexandria & Co, a firm of Chartered Certified Accountants. You are preparing the engagement letter for the audit of M & M, a public limited company, for the year ending 30 June 2020. M & M has grown rapidly over the past few years and is now one of your firms most important clients. M & M has been an audit client for eight years and Alexandria & Co has provided audit, taxation and management consultancy advice during this time. The client has been satisfied with the services provided, although the taxation fee for the period to 31 December 2019 remains unpaid. Audit personnel available for this years audit are most of the staff from last year, including Mr. Grace, an audit partner and Mr. Riley, an audit senior. Mr. Grace has been the audit partner since M & M became an audit client. You are aware that Alyia Grace, the daughter of Mr. Grace has recently been appointed the Financial Director at M & M. To celebrate her new appointment, Alyia has suggested taking all the audit staff out to an expensive restaurant prior to the start of the audit work for this year.

Required:

Identify and explain the risks to independence arising in carrying out your audit of M & M for the year ending 30th June 2020 and, suggest ways of mitigating each of the of the risks you identify.