Mountain Mines Lubrication Ltd. (MML), a Canadian private company, supplies lubricant to mining operations in northern British Columbia and the Northwest Territories. MML commenced operations four years ago and is based in Prince George, B.C. MML has two lubricant products: "Slip Coat" and "Maximum Guard." MML's lubricants are used in large, expensive mining machines and are crucial to the operation of the machines. Without good lubrication, the machines will overheat and break down.

The mining industry has not performed well in recent years, but over the last summer the economy has picked up and, according to MML's owner, Max Mulholland, the B.C. mines are running at peak capacity. Customer service is key to the business. Max says that MML has been able to survive the hard times because it is more flexible and its products cost less than those of its competitors.

MML is a new client of your firm. You, CA, have been assigned to conduct the review engagement. You have met with Max and with Nina Verhan, the bookkeeper. You have been working at the client's office for two days. The partner would like a memo analyzing the issues you have identified in the review.

Required:
Prepare the memo.