Tiyumba Co is a new client of Anwaar and Co, an audit firm. Tiyumba Co runs a spa, trading as Tiyumba. The spa is open to non-members and members. Members pay an annual membership fee that entitles them to 50% off spa rates for individual treatments and sessions. The spa employs lifeguards, masseuses, beauty therapists and nursery nurses for its crche facilities. In addition, there is also administrative staff, including a finance controller, who reports to the managing director, Ibrahim Osman (who is also the major shareholder). The spa has been in business five years, but this is the first time it has required an audit. Its major local competitor is Doobia, a large members-only spa, which started business two years ago. Anwaar and Co has just been invited to tender for the audit of the company which owns Doobia. The finance controller at Tiyumba is Mma Fatima. She was employed 18 months ago, since then she has: Instituted control procedures outlined in a controls manual; Formalised a budgeting system so that budgets are now prepared and approved annually; and Identified the need for an audit to Ibrahim Osman. Mma Fatima introduced Anwaar and Co to Ibrahim through her husband, Anthony Davidson, who is a manager at Anwaar and Co. The audit engagement partner assigned to Tiyumba is Carol Lamb. Since agreeing audit terms with Anwaar and Co, Ibrahim has: Invited Carol to advertise to employees of Anwaar and Co a staff membership rate, which is 50% of standard membership rates and then entitles the member to 75% off spa rates Asked Carol if she will sit on the board of directors at Tiyumba Co as a non-executive director Asked Carol if the firm will confirm the figures on an insurance claim to be submitted in respect of a fire in the treatment centre just prior to the year end Required: (a) (i) Explain the ethical threats which may affect the independence of Anwaar and Cos audit of Tiyumba Co; and (ii) For each threat explain how it might be avoided. (b) Explain five procedures you would carry out to obtain an understanding of Tiyumba Co in order to conduct the first year audit. (c) Explain the benefits of a company having an audit committee.