Explain whether this situation presents any threats to independence and if so, explain the threats and describe the possible safeguards that could be implemented to mitigate the threats.
You work as an audit junior for Smith Holidays Co, a firm that specialises in luxury holidays. The auditor's opinion on the financial statements is likely to be modified this year.
Just before the end of the current audit, the finance director of Smith Holidays Co offers each member of the audit team a discount of 75% on the price of a holiday. At the end of the audit, the financial director also gives a box of chocolates to each member of her finance team and also to each member of the audit team as she has done in previous years as a token of appreciation for everyone's hard work.
Required:
Explain whether this situation presents any threats to independence and if so, explain the threats and describe the possible safeguards that could be implemented to mitigate the threats.
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