Integrative Case Study$$Armstrong$,$ Aldrin & Collins Professional Corporation

Armstrong, Aldrin & Collins Professional Corporation $($AAC$)$ operates a public accounting practice that is located in Woodstock, Ontario. AAC$$s common shares are owned equally by its three shareholders, who are Chartered Professional Accountants $($CPAs$).$ A plan to open an office in Stratford, Ontario, on November $1,2023,$ has been developed. Financing has been arranged with the bank subject to AAC providing the bank with its audited financial statements prepared in accordance with Accounting Standards for Private Enterprises for the fiscal year ending September $30,2023,$ and for subsequent fiscal years. AAC has engaged Smithee & Co$.,$ CPAs, to perform the audit of AAC$$s financial statements for the year ending September $30,2023.$ You, a CPA, have been assigned the role of audit senior on this engagement.

It is July $25,2023,$ and Roberta Payette, the engagement partner, calls you into her office and says: $$I want you to prepare the audit engagement planning memo for the AAC audit. Please consider the risk and appropriate audit strategy. You should note that AAC$$s financial statements have not been previously independently audited or reviewed.$$ The partner continues: $$AAC has implemented a newworking paper preparation and maintenance system and the shareholders have asked us to identify any weaknesses in the system and to provide recommendations for improving the system. The shareholders want the new system to provide proper quality control for AAC. I want you to prepare a draft report that addresses this client request.$$

Background information

AAC was formed seven years ago and has experienced rapid growth. AAC has hired three university graduates

who will start work in September $2023.$ Roberta says that Wally Cunningham, AAC$$s controller, isresponsible for setting accounting policies because the shareholders are $$too busy growing the business

to spend time on internal accounting matters, and Wally has a university accounting degree and knows

what he is doing.$$ However, Wally has recently found it difficult to keep up to date with auditing and

accounting standards.

Required

a$.$ Prepare an audit planning memo considering the audit risk and audit approach.

b$.$ Prepare a draft report that addresses the control weaknesses of the new system. For each item, address the implication and make a recommendation.