Question 1

Greenbloom Garden Centers is a small, privately held corporation that has two stores in ON.

The Greenbloom family owns 100% of the company's shares, and family members manage their

operations. Sales at the company's stores have been growing rapidly and there appears to be a market

for the company's sales concept - providing bulk garden equipment and supplies at low prices. The

controller prepares the company's financial statements, which are not audited. The company has no debt

but is considering expanding to other cities. Such expansion may consider long term financing and is

likely to reduce the family's day to day operations. The family does not intend to sell the shares to the

public.

Required

I.Discuss two factors that make an audit necessary for the company.

II.Discuss two reasons why an audit may not be necessary for Greenbloom.

Question 2

a. Identify and explain 4 factors that may give rise to information risk from the perspective of the user

b. Explain how auditors can reduce information risk (or how auditors lend credibility to the audited

financial statements)