Answer
See explanation
Work Step by Step
a.The rules are imperative and significant because they reduce the likelihood of the self-interest threat. Auditors may be tempted to issue favourable opinions about companies where they have personal financial interests.
b. This idea is risky as it may result in an advocacy threat. The auditors may influence their colleagues (tasked with auditing companies where their other auditors have invested) to issue favourable opinions.
c. This complicates the CPAs' work by increasing the likelihood of self-review threat. The CPAs may find themselves in situations where they review work conducted by their employers. The risk of self-review increases when an auditing company offers auditing and consultancy services to the same client. The CPAs in that company may end up reviewing consultancy work done by the same auditing company.
d. To the sake of objectivity and professionalism, I would recuse myself from undertaking auditing assignments at IBM because I have a financial interest in the company.
e. PricewaterhouseCoopers wanted to reduce its chances of being held legally and professionally liable due to the unprofessionalism and illegalities of the employees who conduct assignments using the company's name. The fire employees risked tainting the credibility of PWC.
