QUESTION FOUR $[25]$

You are an audit partner at UJ Inc., a small audit firm based in Sandton. One of your biggest clients is Joburg $($Pty$)$ Ltd$,$ for whom you$$ve been doing bookkeeping and compiling financial statements for the past $5$ years. Joburg $($Pty$)$ Ltd recently got rid of their auditors for reasons that the MD says that are $$not really important$,$ so he has now approached you to be the new auditors. The MD says he knows you so well and trusts you with the audit of the company and he also commented that it will be easy as you know everything that$$s going on$.$ The MD promised to pay you twice as much if you take on Joburg $($Pty$)$ Ltd as a client.

This means that the revenue of UJ Inc will be made up of majority of the income from Joburg $($Pty$)$ Ltd$.$ The only thing the MD required from you is an audited set of financial statements and you must adjust the assets so that Joburg $($Pty$)$ Ltd has a higher net asset value. $$I know you won$$t be as stubborn and stupid as our last auditor at least you know better than to jeopardise losing such a big fee $-$ since we$$re effectively two clients in one$,$ he says with a chuckle and pat on the back.

Required:

Based on SAICA code of professional conduct, identify threats to compliance with the fundamental principles and discuss the possible safeguards which could reduce the threats to an acceptable level.