FoodBots produces robotic parts for the food manufacturing industry. It is a private company owned by two equal shareholders: Imaan and Sofia. They started the company in 2015 and were initially quite successful. The robotics parts are challenging to develop and, if manufactured improperly, due to the nature of the use (food manufacturing), could result in significant liability. For example, if the parts manufactured by the company are found to be the cause of food contamination, it would place FoodBots at risk of a lawsuit. In fact, one of their major customers is currently investigating the cause of contamination in one of their food production facilities. Imaan feels it is unlikely; however, it is yet unknown whether there will be liability related to FoodBots as a result of the investigation.

In recent years, the business has had its struggles. There is more competition, and they are finding it more difficult to retain key staff due to a competitive employment market for finance and IT professionals in the area. Imaan and Sofia are finding themselves more involved in the business over the 18 months. They are now directly performing key accounting and finance functions as most of the turnover has been within the accounting team.

They have made the difficult decision to sell the business this year and have an interested buyer. Audited financial statements are a requirement of the loan agreement for the buyer.

Your audit firm has been appointed the new auditor this year. Robotics is a specialized field, and your firm is excited to work with a new type of company despite not having any IT or engineering specialists in the firm. The previous auditor was a small local firm, and the owner retired last year after a disciplinary hearing regarding inappropriate professional behaviour unsuitable for CPAs.

• Review the client's financial statement information in Appendix A:Financial Statement Information.
• Review the client's list of IT General Controls in Appendix B:IT General Control Listing.

Part 1-Client Acceptance.

1. Assume FOODBOTS has not yet been accepted as a client. What factors should you consider before accepting this client (state and explain three). To be awarded marks you must relate it to the case facts. 2. If your firm decides to accept the client, what issue arises that could violate the CPAs code of conduct and auditing standards? How can it be addressed?

a memo NEEDED

Part 2- Risk Assessment and Materiality.

second memo that presents the following information to your audit manager:

1. A risk assessment of the client (consider industry, company, and economy) and determination of the corresponding inherent risk level (High, Moderate, Low).
2. Identify the users that should be considered when determining materiality and their needs
3. Recommendation for materiality:
   1. Indicate the base (benchmark) of materiality would you use and why. (Be sure to consider both quantitative and qualitative factors).
4. Calculation of materiality
5. Assume that control risk is set at high. Advise what level detection risk should be set atand the implication it will have on the audit strategy and approach.