Growcer Inc, located in Detah, Northwest Territories operates a modular hydroponic farm system in accessible containers, pictured below.

Operating the modular hydroponic system in climate-controlled containers allows Growcer to grow fresh organic produce, such as wildfire lettuce, arugula, spinach, kale, bok choy and mint in the cold northern weather, all year round. Growcer owns and operates five such climate-controlled containers. Each container is hooked up to a water source and a power supply. In case of power failure, the containers are also connected to an old backup diesel generator.

In a hydroponic system, plants sit directly in water, not in the soil. This way nutrients are constantly delivered to each plant, which significantly shortens the time that it takes for the plants to grow.

Growcer sells freshly grown organic produce to three grocery stores, one located in Detah and two stores located in Yellowknife. In addition, in late 2019 Growcer signed a 5-year contract to prepare and supply "Greenthy" lunches to Range Lake North Elementary School, also located in Yellowknife. Growcer prepares "Greenthy" lunches out of its freshly grown organic produce. Under the terms of the contract, the school places lunch orders each morning for the actual number of children attending school that day.

Today is March 17, 2022 and you are an audit senior at Stel&Og LLPa local public accounting firm assigned to the Growcer Inc. financial statement audit for the year ended December 31, 2021.

Growcer was established in 2016 by three siblings, Sandra, Peter and Bartosz, each holding an equal share of the company. Prior to starting their business, Sandra was a history professor, Bartosz worked as a pharmacy technician and Peter worked as a manager at a local bank. All three were vegans and were always in search of fresh organic produce. In 2018, Peter retired and relocated to Portugal. He is no longer involved in the business. Each year Sandra and Bartosz sendPeter his annual dividend payment together with the financial statements, audited by your firm since 2018. Peter has expressed concern that despite Growcer's growth his dividend payments haven't increased. After receiving last year's financial statements, he advised Sandra and Bartosz that they should look for efficiencies to help save on administrative costs. This way they would have more cash for dividends without impacting the business operations.

Since setting up the first container in early 2016, Growcer's business has been booming. Each year, demand for fresh grown produce has outstripped supply. Growcer has attempted to keep their supply in-line with the growing demand and to do so they have added one new container each year. Growcer has funded the purchases of new containers with cash generated through its business operations.

Employees and HR Matters

In addition to Sandra and Bartosz, Growcer employs five additional fulltime staff who looked after farming. Growcer also previously employed two accountants, a fulltime CPA and a part-time bookkeeper. In June of 2021 Sandra and Bartosz announced to all employees that from September 1, 2021 all Growcer employees must be fully vaccinated against COVID-19. The CPA accountant and the bookkeeper refused to get vaccinated and were laid off effective September 1, 2021. Since then, one of the five employees, Todd, who completed a two-year bookkeeping course at a local collage has been responsible for all accounting matters. At first Todd felt overwhelmed with the new tasks, especially since the two accountants left abruptly and never provided him with any training. He has now become accustomed to the Quickbooks software and is surprised at how easily financial statements are generated once he posts the daily transactions. Sandra and Bartosz try to help, but they are mostly focused on farming and growing the business. Todd is pretty much left alone to do most of the accounting, and invoice processing. Another employee is responsible for ordering and receiving supplies.

Attracting professional accountants to work and live in Detah is extremely challenging and to date, despite engaging a well-known recruiter,Sandra and Bartosz have been unable to attract a qualified CPA to join Growcer.

Farm Credit Canada and Expansion Plans

After another record year, in early September 2021, Sandra and Bartosz approached Farm Credit Canada, about a $170,000 loan. The plan is to use the money to accelerate Growcer's expansion in 2022 and purchase three additional new containers. Farm Credit Canada, has conditionally preapproved the loan, pending the following:

1. before April 30, 2022, Growcer must submit to Farm Credit Canada its 2021 financial statements, including an opinion from an assurance provider; and

Growcer's must meet the following conditions (on its 2021 financial statements):

1. 60% of the carrying amount (book value) of current assets must total $170,000 or more;
2. 45% of the carrying amount (book value) of total assets must total $170,000 or more;
3. current ratio (as calculated by dividing current assets by current liabilities) must be at least 3:1; and
4. 2021 revenue must be 20% or greater than revenue recorded in 2020.

Sandra and Bartosz are very excited about getting preapproved for the loan and they already pre-ordered equipment necessary to setup the three new farm containers.

Non-fungible Tokens (NFTs)

After an incredibly profitable 2020, Growcer had some extra cash. On January 12 2021, Bartosz decided to purchase for $10,000 USD an NFT of a graphic (see picture below) issued by an Inuit artistKenojuak Ashevak from Kinngait, Cape Dorset, Nunavut. Bartosz is a huge fan of Inuit art and felt that the purchase of the NFTs is not only an investment but also a way for Gorwcer to support and recognize local Inuit artists. The NFT was purchased in USD currency on an online exchange.

NFTs areunique cryptographic tokens that exist on a blockchainand cannot be replicated. NFTs can be used to represent real-world items like artwork and real-estate. "Tokeninzing" these real-world tangible assets allows them to be bought, sold, and traded online. Artists can sign their digital artwork with their own signature in the metadata.

The Range Lake North Elementary School Incident

On Dec 1, 2021, Sandra received an alarming call from the school principal who said that a six-year-old girl named Emilia, swallowed a small piece of very sharp plastic that broke off from the edge of a reusable lunch container used by Growcer to pack its "Greenthy" lunches. Emilia sustained serous internal cuts and bleeding and was taken to a hospital. The principle told Sandra, that the school is immediately suspending the delivery of "Greenthy" lunches until Sandra finds a safer container. It took Sandra until late January 2022 to finally locate a container safe enough for the school to approve. The new containers cost $3.5 each, which was 50 cents more than the old unsafe containers. Thankfully Sandra found a buyer for the 4,000 old unsafe plastic containers, after agreeing to sell it at a significantly discounted price. "Greenthy" lunch deliveries resumed on February 7, 2022.

Distressed by the call, Sandra together with Bartosz jumped into a car and drove to the hospital to check up on Emilia. At the hospital, they ran into Emilia's mother, Jolanta, who was understandably very upset. In a moment of tense emotions, to recompense Emilia and Jolanta for everything that has happened, and to prevent the spread of bad word about Growcer among the parents and in the Yellowknife community, Bartosz apologized and offered to gift Jolanta $20,000 to setup a scholarship fund for Emilia. Jolanta accepted the offer and the apology. The following day Sandra emailed Jolanta confirming that Growcer will gift her $20,000 once Jolanta provides the scholarship fund account number in Emilia's name, to which Jolanta replied "Will get to it and will do, in early January 2022, thank you! Have a wonderful Christmas".

The Moss & Fungi Attack

Harvested fresh organic produce must be stored in a dry and refrigerated place, otherwise within just a couple of days, it could be attacked by moss and fungi and becomes unsalable. On November 17, 2021, Bartosz received an email from Chris, the new owner of one of the grocery stores in Yellowknife, see below:

Yearend Inventory Count

Growcer's 2021 yearend inventory count was attended by a junior staff member from your audit team, the following are her notes from the day of the count:

• The count was very well organized and done well;
• Everything was double counted by two different employees;
• Growcer's staff were very well trained and had a systematic approach to the count;
• One of the five farming containers is not working and is being used for storage of supplies and lunch containers only;
• One of the four big farm containers was dark and extremely cold inside. Upon further investigation, one of Growcer's staff members discovered that power was off. The diesel backup generator was working, but cables running from the generator to the containers was damaged by rats or by some other animal. There were many teeth marks on the cables. With the help of a cell phone flashlight, I inspected some of the plants, they all looked frozen and sitting in ice. Growcer's staff member counted and included the frozen plants in their inventory. The staff member mentioned that Growcer has an insurance policy that would cover the repairs to the damaged cable, however inventory is not covered by this policy.

Information from the Bookkeeper

On March 18, 2022, in preparation for the audit of the 2021 financial statements, Growcer's bookkeeper sent you excerptsfrom Gorwcer's 2021 financial statements:

Growcer
Balance Sheet
December 31, 2021 (CAD $)
	2021 (Draft - Unaudited)	2020 (Audited)
Cash	78,000	55,000	Note 1
Accounts Receivable	87,000	20,000	Note 2
Inventory	135,500	91,040	Note 3
Property Plant & Equipment	235,000	210,000	Note 4
A/P and Other Current Liabilities	78,000	74,500	Note 5

Note 1 - balance includes the USD $10,000 NFT graphic issued by an Inuit artist. I converted the USD balance using the exchange rate on the date of purchase, January 12 2021.

Note 2 - balance includes $17,000 unpaid by Chris due to the moss and fungi issue. Bartosz told me that he will resolve this issue with Chris over a beer when they get together in the spring for a hockey tournament.The remaining balance is from the store located in Detah, which is not doing so well after the store needed to close for 5 weeks due to an outbreak of the Omicron COVID-19 variant amongst store employees. I am sure that the store will send us the money once they reopen and resume business.

Note 3 -balance includes the cost of the old unsafe plastic containers.

Note 4 - climate control system in one of the farm containers has been continuously breaking down since August 2021. In early October we decided to shut down this container and no longer use it for farming. We just now use it for storage. Come early spring 2022, Bartosz said that he will try to fix the problem and resume to use this container for farming produce.

Note 5 - the $20,000 that Bartosz gifted to Jolanta was wired on January 17, 2022. Since this was a gift, I just reduced the cash total by the $20,000 when Bartosz wired the money.

Here are the revenue numbers from 2021 and the 2020 and 2021 quarterly revenue from Range Lake North Elementary School that your audit manager has asked for:

Growcer
Income Statement
December 31, 2021 (CAD $)
	2021 (Draft - Unaudited)	2020 (Audited)
Revenue	733,598	605,300

Walkthroughs

On March 20, 2022, one of your audit staff members, conducted process walkthroughs, below are his notes:

Invoice Payment Process

Growcer buys plant seeds and farming supplies from a number of different vendors. Some suppliers send their invoices by email, whereas others send it by regular mail. During the walkthrough Todd realized that the antispam filter installed in late November 2021, was redirecting some emailed invoices into a junk folder. Several unpaid invoices found in this folder were for supplies received in late October 2021. During our meeting, Todd disabled the antispam filterand processed and paid the outstanding invoices. Todd said that he does not match any of the emailed invoices to shipping/receiving documents, since they are electronic, he said that "they must be correct".

According to prior year's audit working papers, invoices received by mail are matched to shipping/receiving documents, but the sample that I reviewed were not matched. There is also no secondary review to ensure that Todd selects the correct accounts before he journalizes the invoiced amounts. I found a few mistakes, for instance, an invoice from August 2021 for $4,890 for some repairs done to fix a climate control system in one of the farm containers was capitalized. Todd said his friend who does his taxes told him what to do. When Todd was looking for a calculator in one of the drawers, he was shocked to find a folder labeled "unprocessed paper invoices 2021". Inside it there was a stack of invoices from 2021 that were unpaid.

Ordering and Receiving Process

Roberta, one of the five employees, is responsible for ordering supplies. Without checking what's on hand, she usually orders what she thinks is necessary, sometimes ordering too much.Orders are placed over the phone. Weekly shipment of ordered supplies such as seeds, plant nutrients and packaging are delivered in early morning and left outside the doors of one of the farming containers until Roberta finds time later in the day to put them away. Roberta, mentioned that she is usually too busy to verify the quantity of received supplies.

As the audit manager atStel&Og LLP, complete the following components of the audit file.

Part A (i). Identify 3 factors which impact the risk of material misstatement at the overall financial statement level. For each factor indicate the impact on RMM (Increase or decrease) and explain. (6 marks) Growcer Inc, located in Detah, Northwest Territories operates a modular hydroponic farm system in accessible containers, pictured below.

Operating the modular hydroponic system in climate-controlled containers allows Growcer to grow fresh organic produce, such as wildfire lettuce, arugula, spinach, kale, bok choy and mint in the cold northern weather, all year round. Growcer owns and operates five such climate-controlled containers. Each container is hooked up to a water source and a power supply. In case of power failure, the containers are also connected to an old backup diesel generator.

In a hydroponic system, plants sit directly in water, not in the soil. This way nutrients are constantly delivered to each plant, which significantly shortens the time that it takes for the plants to grow.

Growcer sells freshly grown organic produce to three grocery stores, one located in Detah and two stores located in Yellowknife. In addition, in late 2019 Growcer signed a 5-year contract to prepare and supply "Greenthy" lunches to Range Lake North Elementary School, also located in Yellowknife. Growcer prepares "Greenthy" lunches out of its freshly grown organic produce. Under the terms of the contract, the school places lunch orders each morning for the actual number of children attending school that day.

Today is March 17, 2022 and you are an audit senior at Stel&Og LLPa local public accounting firm assigned to the Growcer Inc. financial statement audit for the year ended December 31, 2021.

Growcer was established in 2016 by three siblings, Sandra, Peter and Bartosz, each holding an equal share of the company. Prior to starting their business, Sandra was a history professor, Bartosz worked as a pharmacy technician and Peter worked as a manager at a local bank. All three were vegans and were always in search of fresh organic produce. In 2018, Peter retired and relocated to Portugal. He is no longer involved in the business. Each year Sandra and Bartosz sendPeter his annual dividend payment together with the financial statements, audited by your firm since 2018. Peter has expressed concern that despite Growcer's growth his dividend payments haven't increased. After receiving last year's financial statements, he advised Sandra and Bartosz that they should look for efficiencies to help save on administrative costs. This way they would have more cash for dividends without impacting the business operations.

Since setting up the first container in early 2016, Growcer's business has been booming. Each year, demand for fresh grown produce has outstripped supply. Growcer has attempted to keep their supply in-line with the growing demand and to do so they have added one new container each year. Growcer has funded the purchases of new containers with cash generated through its business operations.

Employees and HR Matters

In addition to Sandra and Bartosz, Growcer employs five additional fulltime staff who looked after farming. Growcer also previously employed two accountants, a fulltime CPA and a part-time bookkeeper. In June of 2021 Sandra and Bartosz announced to all employees that from September 1, 2021 all Growcer employees must be fully vaccinated against COVID-19. The CPA accountant and the bookkeeper refused to get vaccinated and were laid off effective September 1, 2021. Since then, one of the five employees, Todd, who completed a two-year bookkeeping course at a local collage has been responsible for all accounting matters. At first Todd felt overwhelmed with the new tasks, especially since the two accountants left abruptly and never provided him with any training. He has now become accustomed to the Quickbooks software and is surprised at how easily financial statements are generated once he posts the daily transactions. Sandra and Bartosz try to help, but they are mostly focused on farming and growing the business. Todd is pretty much left alone to do most of the accounting, and invoice processing. Another employee is responsible for ordering and receiving supplies.

Attracting professional accountants to work and live in Detah is extremely challenging and to date, despite engaging a well-known recruiter,Sandra and Bartosz have been unable to attract a qualified CPA to join Growcer.

Farm Credit Canada and Expansion Plans

After another record year, in early September 2021, Sandra and Bartosz approached Farm Credit Canada, about a $170,000 loan. The plan is to use the money to accelerate Growcer's expansion in 2022 and purchase three additional new containers. Farm Credit Canada, has conditionally preapproved the loan, pending the following:

1. before April 30, 2022, Growcer must submit to Farm Credit Canada its 2021 financial statements, including an opinion from an assurance provider; and

Growcer's must meet the following conditions (on its 2021 financial statements):

1. 60% of the carrying amount (book value) of current assets must total $170,000 or more;
2. 45% of the carrying amount (book value) of total assets must total $170,000 or more;
3. current ratio (as calculated by dividing current assets by current liabilities) must be at least 3:1; and
4. 2021 revenue must be 20% or greater than revenue recorded in 2020.

Sandra and Bartosz are very excited about getting preapproved for the loan and they already pre-ordered equipment necessary to setup the three new farm containers.

Non-fungible Tokens (NFTs)

After an incredibly profitable 2020, Growcer had some extra cash. On January 12 2021, Bartosz decided to purchase for $10,000 USD an NFT of a graphic (see picture below) issued by an Inuit artistKenojuak Ashevak from Kinngait, Cape Dorset, Nunavut. Bartosz is a huge fan of Inuit art and felt that the purchase of the NFTs is not only an investment but also a way for Gorwcer to support and recognize local Inuit artists. The NFT was purchased in USD currency on an online exchange.

NFTs areunique cryptographic tokens that exist on a blockchainand cannot be replicated. NFTs can be used to represent real-world items like artwork and real-estate. "Tokeninzing" these real-world tangible assets allows them to be bought, sold, and traded online. Artists can sign their digital artwork with their own signature in the metadata.

The Range Lake North Elementary School Incident

On Dec 1, 2021, Sandra received an alarming call from the school principal who said that a six-year-old girl named Emilia, swallowed a small piece of very sharp plastic that broke off from the edge of a reusable lunch container used by Growcer to pack its "Greenthy" lunches. Emilia sustained serous internal cuts and bleeding and was taken to a hospital. The principle told Sandra, that the school is immediately suspending the delivery of "Greenthy" lunches until Sandra finds a safer container. It took Sandra until late January 2022 to finally locate a container safe enough for the school to approve. The new containers cost $3.5 each, which was 50 cents more than the old unsafe containers. Thankfully Sandra found a buyer for the 4,000 old unsafe plastic containers, after agreeing to sell it at a significantly discounted price. "Greenthy" lunch deliveries resumed on February 7, 2022.

Distressed by the call, Sandra together with Bartosz jumped into a car and drove to the hospital to check up on Emilia. At the hospital, they ran into Emilia's mother, Jolanta, who was understandably very upset. In a moment of tense emotions, to recompense Emilia and Jolanta for everything that has happened, and to prevent the spread of bad word about Growcer among the parents and in the Yellowknife community, Bartosz apologized and offered to gift Jolanta $20,000 to setup a scholarship fund for Emilia. Jolanta accepted the offer and the apology. The following day Sandra emailed Jolanta confirming that Growcer will gift her $20,000 once Jolanta provides the scholarship fund account number in Emilia's name, to which Jolanta replied "Will get to it and will do, in early January 2022, thank you! Have a wonderful Christmas".

The Moss & Fungi Attack

Harvested fresh organic produce must be stored in a dry and refrigerated place, otherwise within just a couple of days, it could be attacked by moss and fungi and becomes unsalable. On November 17, 2021, Bartosz received an email from Chris, the new owner of one of the grocery stores in Yellowknife, see below:

Yearend Inventory Count

Growcer's 2021 yearend inventory count was attended by a junior staff member from your audit team, the following are her notes from the day of the count:

• The count was very well organized and done well;
• Everything was double counted by two different employees;
• Growcer's staff were very well trained and had a systematic approach to the count;
• One of the five farming containers is not working and is being used for storage of supplies and lunch containers only;
• One of the four big farm containers was dark and extremely cold inside. Upon further investigation, one of Growcer's staff members discovered that power was off. The diesel backup generator was working, but cables running from the generator to the containers was damaged by rats or by some other animal. There were many teeth marks on the cables. With the help of a cell phone flashlight, I inspected some of the plants, they all looked frozen and sitting in ice. Growcer's staff member counted and included the frozen plants in their inventory. The staff member mentioned that Growcer has an insurance policy that would cover the repairs to the damaged cable, however inventory is not covered by this policy.

Information from the Bookkeeper

On March 18, 2022, in preparation for the audit of the 2021 financial statements, Growcer's bookkeeper sent you excerptsfrom Gorwcer's 2021 financial statements:

Growcer
Balance Sheet
December 31, 2021 (CAD $)
	2021 (Draft - Unaudited)	2020 (Audited)
Cash	78,000	55,000	Note 1
Accounts Receivable	87,000	20,000	Note 2
Inventory	135,500	91,040	Note 3
Property Plant & Equipment	235,000	210,000	Note 4
A/P and Other Current Liabilities	78,000	74,500	Note 5

Note 1 - balance includes the USD $10,000 NFT graphic issued by an Inuit artist. I converted the USD balance using the exchange rate on the date of purchase, January 12 2021.

Note 2 - balance includes $17,000 unpaid by Chris due to the moss and fungi issue. Bartosz told me that he will resolve this issue with Chris over a beer when they get together in the spring for a hockey tournament.The remaining balance is from the store located in Detah, which is not doing so well after the store needed to close for 5 weeks due to an outbreak of the Omicron COVID-19 variant amongst store employees. I am sure that the store will send us the money once they reopen and resume business.

Note 3 -balance includes the cost of the old unsafe plastic containers.

Note 4 - climate control system in one of the farm containers has been continuously breaking down since August 2021. In early October we decided to shut down this container and no longer use it for farming. We just now use it for storage. Come early spring 2022, Bartosz said that he will try to fix the problem and resume to use this container for farming produce.

Note 5 - the $20,000 that Bartosz gifted to Jolanta was wired on January 17, 2022. Since this was a gift, I just reduced the cash total by the $20,000 when Bartosz wired the money.

Here are the revenue numbers from 2021 and the 2020 and 2021 quarterly revenue from Range Lake North Elementary School that your audit manager has asked for:

Growcer
Income Statement
December 31, 2021 (CAD $)
	2021 (Draft - Unaudited)	2020 (Audited)
Revenue	733,598	605,300

Walkthroughs

On March 20, 2022, one of your audit staff members, conducted process walkthroughs, below are his notes:

Invoice Payment Process

Growcer buys plant seeds and farming supplies from a number of different vendors. Some suppliers send their invoices by email, whereas others send it by regular mail. During the walkthrough Todd realized that the antispam filter installed in late November 2021, was redirecting some emailed invoices into a junk folder. Several unpaid invoices found in this folder were for supplies received in late October 2021. During our meeting, Todd disabled the antispam filterand processed and paid the outstanding invoices. Todd said that he does not match any of the emailed invoices to shipping/receiving documents, since they are electronic, he said that "they must be correct".

According to prior year's audit working papers, invoices received by mail are matched to shipping/receiving documents, but the sample that I reviewed were not matched. There is also no secondary review to ensure that Todd selects the correct accounts before he journalizes the invoiced amounts. I found a few mistakes, for instance, an invoice from August 2021 for $4,890 for some repairs done to fix a climate control system in one of the farm containers was capitalized. Todd said his friend who does his taxes told him what to do. When Todd was looking for a calculator in one of the drawers, he was shocked to find a folder labeled "unprocessed paper invoices 2021". Inside it there was a stack of invoices from 2021 that were unpaid.

Ordering and Receiving Process

Roberta, one of the five employees, is responsible for ordering supplies. Without checking what's on hand, she usually orders what she thinks is necessary, sometimes ordering too much.Orders are placed over the phone. Weekly shipment of ordered supplies such as seeds, plant nutrients and packaging are delivered in early morning and left outside the doors of one of the farming containers until Roberta finds time later in the day to put them away. Roberta, mentioned that she is usually too busy to verify the quantity of received supplies.

As the audit manager atStel&Og LLP, complete the following components of the audit file.

Part A (i). Identify 3 factors which impact the risk of material misstatement at the overall financial statement level. For each factor indicate the impact on RMM (Increase or decrease) and explain. (6 marks)

Factors (Case facts)	Impact on RMM (Increase/Decrease) (1 mark)	Explanation (1 mark)

PART A (ii). Provide a conclusion about the audit approach that you would select for the audit of Growcer's 2021 financial statements. Explain your rationale. (2 marks)

Part B. Identify 2 factors (case facts) which impact the RMM for sales and accounts receivable cycle. For each factor indicate the relevant account(s) and related assertion(s), the impact on RMM (increase or decrease) and the rationale (explanation) for the impact. (10 marks)

Factor (Case facts) (1/2 marks)	Relevant Account (1 mark)	Related Assertion (1 mark)	Impact RMM (increase/decrease) (1/2 marks)	Explanation (2 marks)

Part C. Identify 4 factors (case facts) which impact the four accounts listed below. For each factor state the relevant assertion(s), the impact on RMM (increase or decrease) and the rationale (explanation) for the impact. (14 marks)

Accounts	Relevant Assertion (1 mark)	Impact on RMM (Increase/Decrease) (1/2 marks)	Case facts and Explanation (2 marks)
Accounts Payable and Other Current Liabilities
Property Plant and Equipment - Farm Containers
Inventory - Fresh Produce
Inventory - Lunch Containers

Part D. Give 4 substantive procedures (audit procedures) that the auditor should perform during the audit for the four accounts listed below. Make sure that the procedure is addressing the assertion that you listed in PART C. (8 marks)

Account	Procedure (2 marks)
Accounts Payable
PPE - Farm Containers
Inventory - Fresh Produce
Inventory - Lunch Containers

Part E. Identify 3 in total, control weaknesses in the Invoice Payment and the Ordering and Receiving processes. For each control weakness, explain the implication (what could go wrong) and provide a recommendation that would address the weakness. (9 marks)

Control Weakness(1 mark)	Implication (1 mark)	Recommendation (1 mark)

Part E.On January 12 2022, the fired unvaccinated CPA accountant sued Growcer for wrongful dismissal seeking damages of $150,000. Bartosz thinks that the lawsuit is frivolous and will be dismissed, however one of the lawyers at a law firm used by Growcer thinks that it is likely that Growcer will have to settle for about $10,000

Part E(i) Provide two audit procedures that the auditor could have performed to identify that the lawsuit existed and that all other potential lawsuits are identified. (2 marks)

	Response
Procedure # 1 Do Not Write Here
Procedure # 2 Do Not Write Here

Part E(ii) Provide a response to the following questions: (7 marks)

Questions	Response
Is this a subsequent event? Yes/No (1 mark)
If this is a subsequent event, what type is it? Type 1 or Type 2? (1 mark)
In what year should Growcer recognize this transaction 2021 or 2022? (1 mark)
Explain why Growcer should record this transaction in the year you selected above? (2 marks)
Provide the journal entry to record this transaction. Include the account and the amount (2 marks)

Part F. Refer to the chart provided by Todd, which shows the year-over-year quarterly revenues from Range Lake North Elementary School. Referring to case facts and using analytical procedures (trend analysis) assess the reasonability of reported quarterly revenue numbers.

(7 marks)

Task	Response
Use case facts to derive/state your expectations about the quarterly revenue that Growcer should report in 2021. (2 marks)
Show your supporting calculations/analysis (2 marks)
Is the amount of reported revenue reasonable? Yes/No (1 mark) Explain Why?(1 mark) Provide the impacted assertion (1 mark)

PART G. A friend mentioned to Bartosz and Sandra that they should reconsider whether they need an audit. The friend told them that reviews are much simpler. Bartosz and Sandra ask you the following:

1. What are the differences and similarities between a review and audit engagement? (3 marks)

	Response (1 mark)
1
2
3

1. Do you think it is possible for Growcer's to change to a review engagement for next year? (2022 year-end). (2 marks)

Response (Write below)