Page 1: 1 in 21 3 manendra Patel Attempt 1 Glowing Gardens Nursery (GGN) is a family owned and operated business, founded in 2016 by the sole shareholder Glenda Gould. The nursery is located in Cobble Hill and is set on 4 % acres of landscaped grounds, surrounded by mature cedar trees. While GGN is a popular nursery revenues have been steadily decreasing by 15% to 2% per year. GGN reports under ASPE in an effort to expand the operations of GGN Glenda recently purchased a tract of land adjacent to the nursery for the purpose of raising Bamas Glenda plans to sell the lama milk and wool in the nursery shop. To finance the purchase, Glenda obtained a $1.5 million loan from National Bank. The loan is secured against the nursery land and building, and the bank has requested that GGN produce audited financial statements annually. Your firm, Twigg and Hower, CPA, have been hired to perform the first audit of GGN for the year ended December, 31, 2021 GGN's books are prepared by Glenda's nephew Gordon Gruff. Gordon began working for Glenda as the head of maintenance in 2017. A year ago, Glenda asked Gordon to take over for the outgoing accountant, as Gordon is the only member of GGN's staff that Glenda trusts. To supplement his practical experience, Gordon has recently completed an online introductory accounting class through the local community college In the past year, GGN has experienced significant staff turnover. Salaries at GGN are lower than industry and many staff members have left GGN for other jobs in the community. Many staff have complained that Glenda doesn't take enough interest in the day to day operations of the company, even when serious issues like the recent theft of a company van have arisen. Gordon recently implemented a new automated financial accounting system as the old system used by GON was discontinued by the developer. While Gordon initially struggled with the implementation, the system is now up and running, and Gordon is confident that the internal controls that he has designed will be effective in preventing and detecting material misstatement. Due to a lack of training, Gordon's two staff members have been bypassing some of the automated controls. Instead, they are keeping records outside of the system using Excel, as they don't trust the new financial accounting system to properly account for transactions. Part A Required: Assuming that audit risk is low, analyze and conclude on inherent risk (IR), control risk (CR) and planned detection risk (DR) at the overall financial statement level (OFSL) for GGN. Considering your conclusion of detection risk, explain the impact on the audit of GGN. Part B Required: Based on the results of GGN's risk assessment above, should a combined or a substantive audit strategy be used? Why have you chosen this strategy? Paragraph BI UN +v 20