Scenario 3 (4 marks) On June 15, 2015 Erica McBride, CA and partner was offered and accepted the ngagement to audit the annual financial statements of Kwoktan Corporation for the year ended December 31, 2015. The audit began on October 1, 2015 and was substantially completed by March 13, 2016. Kwoktan Corporation is a public company listed on the Toronto Stock Exchange and has share capital of $55 million. Ms. McBride served as the corporate controller of Kwoktan from January 8, 2004 until February 5, 2015 at which time she term inated her employment with Kwoktan. Ms. McBride owned a material amount of Kwoktan's common shares from January 8, 2004, until June 12, 2015, at which time she sold the shares. Question 4 (18 marks) You are the senior auditor in charge December 2016 year-end audit for Cleo Patrick Cosmetics Inc (CPCI). CPCI is a large privately-held Canadian company that was founded in 1995 by one of Canada's most well-known hair stylists, Cleo Patrick. Cleo Patrick, is a well-known celebrity hair stylist who has appeared on a variety of television shows such as Entertainment Tonight, and has been the chief stylist for the Oscars and Emmys. The company includes: (1) a small chain of ten upscale salons situated in major cities in Canada and the US and (2) its well-known signature line of professional hair products that are available at select drug stores and retail chains. The core of its business is its signature hair products line, Cleo Patrick True Professional. The True Professional line represents 85% of the company's total revenue. During the planning phase of the audit, you performed various planning activities and met with CPCI's management team. Here is what you learned