Your firm has been invited to accept appointment as auditor of Delta Springs Limited, a company operating in the bottled water industry. The following facts have emerged: (i) The finance director of Delta Springs is the sister of your firm's engagement partner for the assignment. (ii) Delta Springs has asked your firm to prepare its financial statements in addition to auditing them. (iii) The proposed audit fee represents 22% of your firm's total annual fee income. (iv) Delta Springs has offered your firm's staff free use of its holiday resort at any time. Required: (a) Identify the ethical threat arising from each matter and state the fundamental principle at risk. (12 marks) (b) For each matter, recommend an appropriate safeguard or course of action. (8 marks)