AUDITING subject)6/ Alan has been asked to prepare report that analyses the potential acquisition of XYZ Pty Ltd by his client Sun Ltd

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AUDITING subject)6/ Alan has been asked to prepare report that analyses the potential acquisition of XYZ Pty Ltd by his client Sun Ltd. Prior to conducting the analysis, Alan decided to verify the accuracy and completeness of the cash flow statement provided by XYZ Pty Ltd for the year ended 30^th June 2020. After reviewing a draft of his analysis, Sun Ltd.'s Chief Financial Officer has asked Alan to focus his attention on the sales and profitability of XYZ Pty Ltd and avoid the distraction of cash flow reporting. Chief Financial Officer suggests that the acquisition will provide substantial future benefits to Sun Ltd and that confusing the board with cash flow issues would not be helpful to the acquisition or to the likelihood of Alan being asked to undertake similar engagements in Future.

 

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a)       Two (2) threats to Independence with a brief explanation.