Loblaw Company Limited opened their first store in 1919 and is now the largest food retailer in Canada with over 1,000 corporate and franchise supermarkets and $45+ billion in revenue generated annually. Under the Loblaw umbrella includes companies such as PC Financial, Shoppers Drug Mart, PC Mobile, Loblaw Properties, Joe Fresh, T&T Groceries as well as many other brands.

Assume your class has just been approached by the Loblaw Board of Directors to conduct the annual year end audit for Loblaw Company Limited. After doing some preliminary research on the auditee organizations business and environment, describe some risks inherent in the company as part of the process to decide whether to accept the financial statement audit engagement. In addition, see if you can identify any mitigating factors which reduce the risk.

Should our class accept the financial statement audit engagement request from Loblaws Board of Directors? Defend your position.