Reference no: EM132677545

You are one of the members in the accounting firm Vagera Associates. Your firm carries out a range of taxation, consultancy, audit and other assurance services for your client Theobald Ltd. Your firm obtains significant fee income from Theobald Ltd. Consultancy advice was given to Theobald about internal controls for the new payroll system. The fee for this service is overdue.

• The planning work for the year end is about to commence. The relationship between Theobald staff and the audit teams is excellent and the same audit staff have been carrying out the audit for the last five years. The consistency of staffing has been welcomed by the Theobald accounting department, who feel that this allows the audit to be done quickly and efficiently.

• Theobald has recently recruited the audit team manager, Tamara Khan, as the Financial Controller. Tamara will be starting her new role before the year-end audit. Tamara has decided to take the audit team out for lunch, as a thank you for their work over the last five years.

Required:

Problem 1: List and explain THREE threats to auditor independence arising from the above and suggest how these threats may be mitigated.