MIDAS TOUCH 1 You are an Audit Manager at Belbeck & Belbeck Chartered Accountants and are currently review- ing the audit planning section of the September 30, 2012, year-end financial statement audit work- ing papers for the Midas Touch (Midas), a public company which owns and operates a gold mine located in the Northwest Territories. Midas's Head Office is located in Toronto. As is standard in the mining industry, Midas operates in a capital-intensive and regulated market. You are anxious to get started with your file review given that this is a new audit client and you are already behind schedule. On October 31, 2012, the engagement was accepted and an engage- ment letter signed after Midas' previous auditors were recently 'kicked out of the profession' and can no longer conduct audits. Given the sensitivity of the engagement, you have instructed your team not to proceed with the execution phase of the audit until you have reviewed the team's audit plan and provided your feedback. You start to draft your interim review comments based on the following information: 1. Not surprisingly, when your team tried to contact the previous auditors they got no re- sponse. There was a note in the audit file that said, "Due to the fact that we were engaged after the beginning of the client's fiscal year, we have relied on the unqualified opinion of the predecessor audit firm with respect to the opening balance sheet."