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MR. HOCKEY Mr. Hockey, a manufacturer of ice hockey sticks, was formed in 1985 by Bob Smith, a house league hockey coach for a

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MR. HOCKEY Mr. Hockey, a manufacturer of ice hockey sticks, was formed in 1985 by Bob Smith, a house league hockey coach for a local hockey association in Mississauga, Ontario. Bob combined his love for the game and his great business sense and soon the company grew in both size and reputation and today has operating facilities in both Ontario and Saskatchewan. On August 1, 2011, after months of negotiations, Bob was thrilled when the company landed an exclusive contract to supply hockey sticks to all teams in the Kontinental Hockey League (KHL) starting in September 2011, the start of this year's hockey season. Although Mr. Hockey has had a somewhat steady growth in revenue since its formation, income before taxes has been somewhat volatile and Bob is hoping that the KHL contract is what they need to turn the company around. Knowing that he didn't have the funds to support the contract, Bob obtained financing from a venture capital company which has an option of acquiring shares in the company in the future. For the past five years, your firm has conducted a review of Mr. Hockey's year-end financial statements. This year, however, the venture capital company requires that the annual financial state- ments (prepared in accordance with IFRS) be audited, and your firm has been engaged to conduct Mr. Hockey's first audit. 1

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