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An audit firm has been engaged to audit Company X. The audit engagement partner's spouse owns 2% of Company X's shares. Under IESBA Code of Ethics, this represents:

An acceptable situation provided it is disclosed to those charged with governance A self-interest threat that can be reduced to an acceptable level through safeguards A breach of independence requirements that cannot be mitigated — the partner must be replaced An advocacy threat that requires a second partner review

Correct Answer:

A breach of independence requirements that cannot be mitigated — the partner must be replaced

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