Tech Growth Ventures Ltd. is a rapidly expanding tech start-up specializing in innovative e-commerce solutions. The company has attracted substantial interest from investors and venture capitalists due to its ground-breaking products and swift growth. Tech Growth's ownership is primarily held by a group of tech-savvy co-founders who also occupy pivotal roles within the organization. Lisa Anderson is the CEO and Chief Product Officer (CPO), while Michael Rodriguez serves as the Chief Financial Officer (CFO).

As Tech Growth Ventures continued to scale, it recognized the necessity of engaging a reputable audit firm for its inaugural external financial audit for the fiscal year ending on 30th June 2023. Lisa Anderson reached out to your audit firm, Financial Insight Auditors, known for its proficiency in auditing technology start-ups. Recently, a team from Financial Insight completed a project for Tech Growth, focusing on implementing a new financial reporting system. As a matter of policy, the bonuses of the audit partners are determined based on their individual performance metrics and client satisfaction ratings.

During the initial stages of audit planning, a significant revelation emerged: the audit partner assigned to the Tech Growth Ventures audit, Mark Taylor, is a long-time friend of one of the company's founders, Michael Rodriguez. Their friendship, spanning more than a decade, has involved shared interests in technology, travel, and culinary pursuits. Michael occasionally includes Mark in meetings with venture capitalists to help comprehend the implications of complex funding agreements.

Question

Part A

Identify and explain three significant threats to independence for Financial Insight Auditors in accepting the audit of Tech Growth Ventures.

Part B

Explain any relevant and practical safeguards that Financial Insight Auditors could implement to reduce the threats that you identified in Part A. 

Answer rating: 100% (QA)

Part A Significant Threats to Independence for Financial Insight Auditors 1 Selfinterest Threat The longtime friendship between audit partner Mark Taylor and Tech Growth Ventures founder Michael Rodri... View the full answer