Star Studios Inc. (SS) has been a small family-run business. SS has a studio space that is set up to be used for music practice and collaboration. Musical instructors also use the space to provide music lessons to school going children. In the winter of 2020, SS announced it was shutting down. Despite appearing to be a busy operation, SS was unable to tum a significant profit, and the owners wanted out. Blake, her sister-in-law Lexi, and their friend Stevie have used the studios for years and were determined to keep SS open. They pooled their resources and acquired the shares of SS on April 1,2020. The purchase was impulsive, but the friends were sure they could make the business a success. Information on the new owners and notes from discussions with them are provided in Exhibit I Because SS is under new ownership, the bank has requested audited financial statements. The owners have approached your firm to conduct a first-time year-end financial statement audit. It is now May 2, 2021, and you, CA, have just been assigned as the senior on the audit. You have obtained draft financial statements for the year ended March 31, 2021 (Exhibit II) and have gathered other information from SS's administrator and bookkeeper, Mrs. Rose, as well as from the receptionist (Exhibit III). Required: 1. Based on your calculations and case facts, identify the income statement and balance sheet accounts that could be misstated. Calculate the potential errors in the accounts identified and create the adjusted financial statements. Hint: Discuss each error from a double entry perspective and where necessary, add accounts/lines in the financial statements. (12 marks) 2. Identify THREE internal control weaknesses and discuss its impact and provide a control recommendation to improve the process. (9 marks) 3. Based on the adjusted financial statements, calculate a materiality level using an appropriate benchmark. Briefly explain why this benchmark was chosen. Also calculate a performance materiality level. (3 marks) 4. Plan the nature, timing and extent of substantive procedures for the significant accounts/transactions listed below. Note provide procedures for only the listed assertion. Tailor the procedures to the case fats given and avoid repetition of the same procedure (12 marks) a. Revenue-music sessions (Occurrence, Accuracy and Completeness) b. Revenue-concerts (Occurrence) c. Money lent to 3D Inc. (Accuracy, Rights and Obligations) d. Depreciation Expense (Accuracy) e. Cash receipts (Completeness) f Cash disbursements (Occurrence)