Ethical issues

Generally 1 mark per comment:

– Explain why familiarity threat arises
– Explain why intimidation threat arises
– Significant connections should be evaluated 
– If significant connections remain, firm should resign
– If continue with audit, consider modifying audit approach and change audit team
– Review any work recently performed on Grohl Co audit by Bob Halen
– Consider firms policies and procedures 
– Contingent fee not acceptable
– The basis for calculation of the audit fee must be agreed with client

Maximum marks 8