You are a senior auditor at CPA LLP. This year, your audit client is Burnaby Wholesalers Ltd, a Canadian public listed firm that distributes building materials, hardware, gardening, and related products to retail stores that service the "do-it-yourself" home improvement market. The audit engagement team includes you, one engagement partner, three junior auditors, and two senior auditors. The fiscal year-end under audit is December 31, 2021. Prior to the current fiscal year, Burnaby Wholesalers was audited by another public accounting firm, but the client changed auditors in early June 2021 because management was dissatisfied with the predecessor audit firm's high audit fee and lack of timely service. During the audit of Burnaby Wholesalers, you encounter the following scenarios. Please respond to each scenario and include your discussions in one PDF document.

8. On January 15, 2022, Burnaby Wholesalers' founder received a loan of $2,000,000 from the company. This loan was authorized by the company's board of directors, is due and payable in one year, and bears interest at the prevailing prime rate. One of the audit staff learned about the loan when examining the minutes of the board of directors' meetings. He said that this is not a concern at this time but the collectability of the loan should be examined next year. Please discuss whether you agree/disagree with him. (5 marks)