QUESTION $6$

$(20$ Marks$)$

David is a Chartered Accountant $($CA$($SA$))$ working in public practice. He has been a senior partner at a medium$-$sized audit firm for the past $15$ years. Recently, one of David's long$-$standing clients, TechSolutions Ltd$.,$ approached him with an opportunity to invest in their company. TechSolutions Ltd$.$ is a rapidly growing technology firm that has been audited by David's firm for the past eight years. They offered David a chance to buy shares in the company at a discounted price before they go public.

David is excited about the investment opportunity but also aware of his position as the engagement partner responsible for the audit of TechSolutions Ltd$.$ He believes that his extensive knowledge of the company's financials makes it a sound investment. Additionally, David has a close personal relationship with the CFO of TechSolutions Ltd$.,$ with whom he has frequently socialized outside of work.

At the same time, David is approached by a potential new client, GreenEnergy $($Pty$)$ Ltd$.,$ a start$-$up specializing in renewable energy. GreenEnergy $($Pty$)$ Ltd$.$ is looking for an auditor who can also provide advisory services, particularly in helping them secure funding and improve their financial reporting systems. David sees this as an opportunity to grow his firm's client base and agrees to provide both audit and advisory services, anticipating the dual role will make his firm more competitive.

Lastly, David is informed that a junior auditor on his team, who has been involved in the TechSolutions Ltd$.$ audit, has been accepting expensive gifts from the CFO as a token of appreciation for their hard work. The junior auditor does not see this as an issue and has not disclosed the gifts to David or the firm.

You are required to:

Discuss the concerns raised by the scenario with reference to the SAICA Code of Professional Conduct. Identify and explain any threats to the fundamental principles and also suggest safeguards that could be implemented to lower the threats to an acceptable level.