MAA303 Audit And Assurance - Chapter 2: Ethics, Legal Liability And Client Acceptance

2.39 Independence issues in accepting engagements

Using your knowledge of APES 110, identify and explain the potential type of threat to Chan and Partners' independence in situations (1) and (2) above.
What action should Chan and Partners take to eliminate the potential threats to independence in situations (1) and (2) above? What safeguards should be instituted to reduce the risk of similar independence threats occurring in the future?