1. You are an audit senior of Balushi & Co and have been allocated to the audit of Sohar Company, which has been an audit client for your company for the last eight years.

Basma was the audit engagement partner for Sohar Co. and as she had completed seven years as the audit engagement partner, she has recently been rotated off the audit engagement. The current audit Partner, Sandeep, has suggested that in order to maintain a close relationship with Sohar Co., Basma should undertake the role of independent review partner this year. In addition Sohar Co. has requested that Basma will assist them by attending their audit committee meetings, as a non-executive director has recently left the company.

Sohar Co. has also asked Sandeep and the other partners at Balushi & Co to help them in recruiting a new non-executive director.

The total fees received by Balushi & Co for last year equated to 16% of the firms total fee income. The current years audit fee has not yet been confirmed, but along with taxation and other possible non-audit fees the total income from Sohar Co. this year could be greater than for last year.

The audit manager for Sohar Co. has just announced that he is leaving Balushi & Co to join Sohar Co. as the financial controller.

Required:

Using the information above, Identify and explain FIVE threats which may affect the independence of Balushi & Cos audit of Sohar Co.