Question 1 (1 mark) a) List TWO matters which must be included in the engagement letter? b) Distinguish between the audit strategy and the audit plan. (2 marks) You are an audit manager of the audit firm James & Associates with responsibility for the audit of Trim Trading Ltd, a retail company which has been an audit client for eleven years. The following information has come to your attention: Leighton James has been the audit partner since Trim Trading became a client, he therefore has a deep understanding of the client. The client is offering a base fee and a 15% commission if the audit team can complete the audit a week earlier than prior year. The manager who has been on the audit for the past five years has proven herself to be an excellent member of the team. She has been offered a job by the client, which she is considering accepting to start within a month's time. During the year Trim Trading implemented a new accounting system which was designed and implemented by James & Associates and which went smoothly due to the extensive knowledge of the client that the audit firm possesses. Required c) Identify and explain THREE specific examples of ethical threats which may affect the independence of James & Associates' audit of Trim Trading. (3 marks) d) For each threat identified in part (c), explain how it may be reduced