You are the Audit Manager of JBM Incorporated (JBM Inc.) on the audit of a new client CrispyWings (Pty) Ltd (CW) which has a 31 October year-end. There are two shareholders in the company, each owning fifty percent. One of the shareholders, Mrs. Kentucky, is a good golfing friend of another Audit Manager at JBM inc. You, however, have only just been introduced to Mrs. Kentucky. Mr. Fried is the other fifty percent shareholder. The previous audit firm (Adams \& Jacobs) resigned as auditors of CW during the year and is unsure of how to hand over' the audit. You are currently at the planning stage of the 2022 audit of CW and the deadline for the audit report is 16 December 2022 . CW has a Head Office in Johannesburg and fast-food outlets throughout Southern Africa (including Zimbabwe, Mozambique, and Zambia). The outlets operate from properties rented from a property investment company that is owned by CW's directors. Background on CW's operations - Inventory is bought in bulk and distributed to the various outlets via cold storage trucks. - CW operates mainly on a cash sales basis but allows for some corporate customers - who occasionally buy take-away food for functions - to buy on credit. These sales are at each Outlet Manager's discretion. - Creditors' accounts are handled by the Head Office. The Accounts Payable clerks at each outlet scan and email the creditors' invoices and statements from the outlets to the Head Office on a weekly basis. - Outlet Managers receive performance bonuses which are based on the profits of the outlets for which they are responsible. - Mr. Fried is the Managing Director of CW and has an autocratic management style. He has been in the industry for a long time and believes that his 'gut feel' is the reason for the success of the business. He often questions the financial information produced by the Accountants as not being in accordance with his expectations. The accounting department then produces a set of revised results more in line with what he is expecting. Mr. Fried is convinced that making the accounting department revise the financial information means that they have to work harder at reconciliations and clearing suspense accounts which are not always completely up to date. REQUIRED: 1.1 In terms of the Code of Professional Conduct, identify, from the information provided by CrispyWings (Pty) Ltd, the factors the Engagement Partner of JBM Inc. should have considered prior to accepting the appointment as auditor of CrispyWings (Pty) Ltd. Your answer should include the responsibilities of both JBM Inc. as well as Adams \& Jacobs. (16 marks) 1.2 Based on the information provided, describe the audit risks at both financial statement and assertion levels for CrispyWings (Pty) Ltd