QUESTION 1 Ted's Tea (TT) is a Canadian private corporation that is most well known for their unique flavours of loose-leaf tea. They first opened 5 years ago and have grown significantly since then. Ted's Tea has five locations in Atlantic Canada; Halifax, Charlottetown, Fredericton, Moncton, and St. John's, as well as a new manufacturing location in Montreal that was just opened. Since you last met with Ted, you accepted a position of audit senior at Crowell and Cumming LLP. You are the auditor in charge of the Ted's Tea audit. In talking to Ted to gain a greater understanding of the business, you learn that TT has transitioned from APSE to IFRS in the current year. Ted tells you that this was no small feat because his controller had to dig out her university books from her intermediate class to figure out differences between IFRS and ASPE to roll out the changes. He tells you there have been many changes at TT this year, including new contracts to provide The Second Cup with tea throughout all stores in Canada. The Second Cup agreed to a minimum purchase commitment each month, so Ted told you that the controller said we should just record this minimum amount of revenue each month and we will figure out the numbers later. I guess she knows best-I just follow along with whatever she says! Ted decided that he will replace the tea machine whose expected useful life was significantly decreased as it is no longer working well. The new machine is coming next month. The larger company who had approached TT in the past has decided to invest in TT. The purchase price of the shares they will buy are tied to income before tax at the end of the fiscal period, on December 31, 2021. Ted is happy this is happening, because he feels like he has been working far too much lately. TT's controller, Sarah, has really stepped up as she oversees all of the accounting processes, including sales, accounts receivable, purchases, payables, deposits, bank recs, and compiling the financial statements. Thank goodness she does all this so that I don't have to be involved in the numbers. I'll leave that up to you accountants! I really should think about hiring more accounting people though, poor Sarah hasn't had a vacation in years. Required: 1. Provide an analysis and conclusion of risk of material misstatement for the TT audit at the financial statement level (not the assertion level). Include 4 risk factors, noting what TYPE of risk is impacted. 2. Provide a supported discussion of approach that will be used on the audit. 3. Provide two substantive procedures (not control procedures) for two different issues noted in the above discussion