KLB plc is one of your audit clients for the previous 8 years. The following information are available:
- The audit team included a manager and two juniors.
- The client was asking to finish the audit work early this year otherwise they are going to change the auditor next year.
- One-week bonus was paid to the audit team through their payroll as the client was happy that they finished auditing 5 days earlier than theplanned audit time.
- The audit team got 10% discounts on the client’s products. The
same discount is normally given to the client’s staff.
- Your firm offered this client a bookkeeping service for this year. To reduce the audit cost, the engagement letter was not updated this year as there is no big changes in the audit tasks from last year.
- Audit fees are based on a percentage of the net profit before tax.
- One of the audit team received an offer to be appointed in the client’s internal audit department as a head of department.
- The finance director was recently working as an auditor in your audit firm
Identify and explain FIVE ethical threats which arise from the above actions and for each ethical threat explain the steps which your audit firm should adopt to reduce the threats arising