The CEO of Hockeys Resorts, Charlotte Pidgeon, has approached you about undertaking an engagement to value the entire Port Douglas resort for the purposes of securing new finance. Given the impact of COVID-19 on the tourism industry she has suggested that the valuation engagement be undertaken without charging a fee as a gesture of goodwill. Before IDE gained a controlling stake in Hockeys Resorts, Diligence Charted Accountants did undertake valuation work at their resorts. The current value of Hockey Resorts is material to IDE. When discussing the issue with the audit team, Josh McDowell informs you that he was given a small parcel of shares in Hockeys Resorts three years ago by his uncle as an 18th birthday present.

Required With reference to APES110:

identify and explain the potential independence threats to Diligence Chartered Accountants

propose actions your firm should take to eliminate the potential threats to independence and reduce the risk of similar independence threats occurring in the future.