You have been asked by your audit client Blue Water Ltd to prepae a report that

analyses the potential acquisition of Ocean Pty Ltd. As part of your analysis, you decide to verify

the accuracy and completeness of Ocean's most recent cash flow statement. After reviewing a

draft of your preliminary analysis, the chief financial officer (CFO) of Blue Water, Jill Symes, has

asked you to focus your attention on Ocean's sales and profitability and to avoid tlhe distraction

of cash flow reporting. She suggests that the acquisit ion will provide substantial future financial

benefits to Blue Water and that confusing the board with cash flow issues would not be helpful to

the acquisition or to the likelihood of your being asl

future.

REQUIRED

List two threats that may exist in regard to compliance with the fundamental principles of professional

ethics, and identify the fundamental principles that are at risk of being breached.