If a firm or a network firm has a direct financial

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73. If a firm, or a network firm, has a direct financial interest in an audit client of the firm, the self- interest threat created would be so significant no safeguard could reduce the threat to an acceptable level. The action appropriate to permit the firm to perform the engagement would be to a. Dispose of the financial interest. b. Dispose of a sufficient amount of it so that the remaining interest is no longer material. c. Either a or b. d. Neither a nor b. 74. The following self-interest threat created would be so significant no safeguard could reduce the threat to an acceptable level, except Loans and Guarantees 75. The following loans and guarantees would not create a threat to independence, except a. A loan from, or a guarantee thereof by, an assurance client that is a bank or a similar institution, to the firm, provided the loan is made under normal lending procedures, terms and requirements and the loan is immaterial to both the firm and the assurance client. b. A loan from, or a guarantee thereof by, an assurance client that is a bank or a similar institution, to a member of the assurance team or their immediate family, provided the loan is made under normal lending procedures, terms and requirements. c. Deposits made by, or brokerage accounts of, a firm or a member of the assurance team with an assurance client that is a bank, broker or similar institution, provided the deposit or account is held under normal commercial terms. d. If the firm, or a member of the assurance team, makes a loan to an assurance client, that is not a bank or similar institution, or guarantees such an assurance client's borrowing. Close Business Relationship with Assurance Clients 76. Examples of close business relationships that may create self-interest and intimidation threat least likely include a. Having a material financial interest in a joint venture with the assurance client or a controlling owner, director, officer or other individual who performs senior managerial functions for that client. b. Arrangements to combine one or more services or products of the firm with one or more services or products of the assurance client and to market the package with reference to both parties. c. Distribution or marketing arrangements under which the firm acts as a distributor or marketer of the assurance client’s products or services, or the assurance client acts as the distributor or marketer of the products or services of the firm.
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