General Overview Prime Transformers Canada Inc. (PTC) is a Canadian company that is a subsidiary of Optimus Transformers (OT), a company based in Belgium. PTC represents about 5% of the total worldwide operations of OT. Witwicky and Banes, a small independent accounting firm, has strong ties to the local Belgian community, so it has served as PTC's auditor for a number of years. It is now September 30th, 2021. The board of PTC is hoping to review and approve the draft financial statements at its October 12th, 2021 meeting. The year ended June 2021 is the second year PTC's financial statements have been prepared in accordance with Canadian Accounting Standards for Private Enterprises (ASPE). As a component auditor, Witwicky and Banes has been asked to provide an auditor's report confirming that PTC's financial statements are in accordance with ASPE to OT's auditors. The report will accompany the financial statements prepared by management. You, CPA, are the audit manager for the PTC file. You have not had a chance to visit your audit team on site until now, but you have kept in touch with the engagement senior and he has not informed you of any issues. You have just begun your review of the audit file prepared by your staff as part of the concluding and reporting phase and are currently working on providing feedback to them. Your feedback should focus on any areas that need improvement and should include a detailed evaluation of the work performed and any additional work required. To help provide useful feedback, you must include references to any standards that support your analysis and provide detailed audit procedures for any additional work that is required. Exhibit 1 contains excerpts from the PTC audit file, including notes you made based on conversations with the audit team when you arrived on site. Since the main deliverable is the auditor's report, your analysis should include any feedback regarding the format and/or content of the auditor's report to ensure it follows the new standard. Finally, some of the information that you obtained has made you question whether the audit team followed the fundamental ethical principles in the Code of Professional Conduct. As a result, you have decided to include a section of your memo addressing the potential way(s) in which the audit team did not adhere to the fundamental ethical principles. These concerns will be kept confidential until they are discussed with the partner. You believe it is important to report these potential issue(s) to the partner so that the appropriate action(s) can be determined. Required: Prepare the review of the audit file and the auditor's report for the audit team and provide the memo to the partner.