(a) KBS Garden Centres is a small privately held corporation that has two stores. The KBS Garden family owns 100 percent of the company's stock, and family members manage the operations. Sales at the company's store 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 statement, which are not audited. The company has no debt but is considering expanding to other cities. Such expansion may require long-term borrowings and is likely to reduce the family's day-to-day control of the operations. The family does not intend to sell stock in the company, Required: Discuss the factors that may make an audit necessary and potentially valuable for the company by considering the concept of information risk. (10 marks) (b) An important principle for auditors is the need to maintain an appropriate level of professional scepticism Required: 1. Explain during which stages of the audit are auditors required to exhibit professional scepticism. (4 marks) ii. For each of the following independent issues describe how can potentially relate to the principle of professional scepticism: 1. The auditor's firm has served the client for a long period of time, and strong Friendships have developed between the firm personnel and client's officers. 2. Auditors are anxious to complete the audit shortly because of other workload demands and deadlines related to other engagements. 3. The client has mentioned on a number of occasions its desire to reduce (or limit) the audit fee. (6 marks)