You are an audit manager in Ivy&Co, a firm of Chartered Accountants. You are assigning staff to the final audit of Vivi Fashion Bhd (Vivi), a conglomerate listed on Bursa Malaysia, for the year ended 31 December 2019. You are aware of the following matters:

Vivi is a clothing company that sell apparels. You have assigned Elvin and his audit team to the audit of Vivi. This few days, Ivy&Co received the request from eFashion Bhd to audit their company. eFashion Bhd is a company that has same business nature and in competition with Vivi. Ivy&Co is currently negotiating with the chief executive of eFashion Bhd the audit fees. At the end, Ivy&Co decided to accept the request to the audit of eFashion Bhd. You assign Elvin and his team to the audit of eFashion Bhd since you did not aware that Elvin and his audit team are auditing Vivi.

Recently, Joanne, an audit member, has joined Elvins audit team one week ago. She has been assigned to be responsible for Vivis audit. She has revealed to you that she is a former employee of Vivis accounting department, but she had resigned two years ago. She was involved in preparing financial statements for Vivi. Yet, Elvin knew nothing about this and still assigned her to participate in the interim and final audit of Vivi. Due to lack of audit member, you let Joanne to participate and perform the audit of Vivi.

Earlier, Vivi faced some problems in disposal. Vivi approached to Ivy&Co for advice on the disposal of the sewing machine. Since Vivi is a perennial audit client of Ivy&Co all the year around, so I decided to assign Elvin and his audit team to advise and provide assistance on the disposal of the machine. The amount of the disposal of the machine is critical and material to the financial statements of Vivi.

Based on the cases:

a) Discuss ethical issues raised in each case.

b) Discuss which fundamental principles that could be affected by the ethical issues raised in the case.

c) Discuss the potential threats raised in each ethical issue.

d. Discuss necessary safeguards reduce the threats to an acceptable level.