Best Surgical Solutions Limited ("BSSL") was founded in 2005 by Dr. Sanjay Aggarwal, a former world-renowned brain surgeon and Head of Neurosurgery at a local hospital. BSSL designs and manufactures various medical and pharmaceutical products for use in hospitals and medical clinics. The industry is highly competitive, and companies must be innovative in order to remain successful. Seeing the decline of his own health in the past few years, Dr. Aggarwal is interested in selling the business, and a large publicly traded pharmaceutical company in Canada, APO Industries Ltd. ("APO"), has recently come forward to express an interest in taking over the operation of the business. The agreed purchase price for the business will be a multiple of earnings (i.e. 10 X "net income from continuing operations"). The management team at APO has asked Dr. Aggarwal to provide an audited set of financial statements for the most recent fiscal year ended September 30, 2022 (or fiscal year 2021) to further evaluate the potential purchase. To improve comparability, APO requests that BSSL prepares its financial statements in accordance with the GAAP that APO currently follows. Dr. Aggarwal has engaged the services of your firm, Gordon Brown LLP, to perform the audit. In preparation for the audit, you arrange to meet with Mr. Aggarwal to review and discuss any significant transactions or events that took place during the 2021 fiscal year, as well as to review and discuss the draft version of the financial statements that were prepared by the accounting staff at BSSL. From the discussion and review, you note the following: In an effort to stimulate sales and prevent hospitals from purchasing products from its competitors, BSSL now ships several more units of a product than is actually ordered by the hospital. Dr. Aggarwal sees this as a "win-win" for both BSSL and the hospitals, as it helps to alleviate the possibility of the hospitals running out of inventory while increasing the "bottom line" for BSSL. Mr. Aggarwal fully expects that the hospitals will consume the extra inventory that is shipped and there are no concerns regarding collectability. Hospitals have 6 months to decide whether or not to keep the additional inventory or return it for a full-refund. Mr. Aggarwal started shipping extra units to hospitals in May of 2022 and revenue is recorded as the product is shipped. To raise money for additional research, Dr. Aggarwal approached the federal government and received a $2.5 million grant in early July. The condition of the grant was that it must be used in the pursuit of leading edge medical product research". The agreement stipulated immediate repayment was required if the government determined that the money was used for any other purpose. To date, none of the cash has been used. BSSL recorded the $2 million received as a liability. In February, Dr. Aggarwal decided it was time to "phase out" the pharmaceutical products division at BSSL in light of weak demand for its products and declining profit margins. Although no formal plan is in place regarding the phase out of this division, Dr. Aggarwal does not foresee any issues in selling the division and fully expects the division to cease operations within the next year. The operating loss of the pharmaceutical division ($1.05m, pre-tax) is presented separately as a discontinued operation on the Statement of Earnings. On April 30th, BSSL agreed to exchange a piece of equipment (i.e. a high-powered microscope) that is used in the research lab for a similar piece of equipment held by a related corporation. The exchange resulted in a gain, which is included in the Statement of Earnings. The new piece of equipment has replaced the exchanged equipment and performs substantially the same functions. The fair market value and remaining useful life for both pieces of equipment are also similar. BSSL has offered lenient credit to several important customers. This has been a growing concern as the amount that these customers owe BSSL has become quite substantial and a significant portion of it has been overdue. Mr. Aggarwal does not want the accounting department to chase after these customers. BSSL is now considering transferring these receivables over to another company for handling. Mr. Aggarwal is unsure how he should proceed and has no idea of the implications this has for BSSL's financials as a whole. He wants to have your input on this. REQUIRED: Assuming the role of auditor, prepare a memo to discuss any financial accounting issues you identify in preparation for fiscal year ending September 30, 2022.