Threats:

1. Familiarity threat – The appointment of Koffie’s wife as a personal assistant to the Chief Executive of Ake Ltd may create a familiarity threat, as she is closely associated with the leadership of the client. This could impair Koffie’s objectivity and independence in conducting the audit.
2. Self-interest and intimidation threat – The audit team receiving lunch and money for transport may lead to self-interest or intimidation threats. Even though the gifts are minor, they could influence the audit team’s decisions or lead to perceptions of compromised independence.

Safeguards:

1. Limited influence of personal assistant role – Since Koffie’s wife holds a non-executive role as a personal assistant, her influence on the audit is minimal. The audit firm should ensure that this relationship does not affect the audit’s independence by monitoring interactions.
2. Rejecting financial incentives – The audit firm should develop a policy prohibiting auditors from accepting any gratuities, even small ones such as meals and transport money, to safeguard against perceived or actual threats to independence.

(4 marks)