Audit Assignment

To: Ted Katz, Partner, Katz& Sargood LLP

From: CPA, CA/CGA/CMA

RE: Bulletproof Greens (GREENS) 2014 Audit Engagement

Audit Planning Memo

Risk of Material Misstatement

The risk of material misstatement is higher because:

* GREENS has entered into a new bank loan agreement, and is required to provide audited financial statement within 90 days of its fiscal year end. In addition, GREENS has also signed a sponsorship contract to use Tiger Mood’s testimonial to associate the HeartMath EMWave2 product. Therefore, there is an increase reliance on the financial statement by the new financial institution and Tiger Moods.

* The all year-end information would be ready for the suit team by March 15, 2015, however the client is pressuring us to complete the audit engagement before March as the deadline for providing audited financial statement for the bank is end of February in 2015.

* The vacancy of the controller position since February may leads to an increase of errors in the financial statement compare to last year.

* GREEN is undergoing a change in information system in the past. This will involve several complex issue and decrease in the effectiveness of existing internal control and an increase in control risk.

Approach

* Control risk is assessed as higher than the previous year because there are several internal control weaknesses ( as discussed below)

* It appears that Dave has made a lot of business decision without consulting with the CFO and Board of Directors

* However as long as the control over the other processes and accounts are effective, an overall combined approach can be used for the audit.

Materiality

* There is an increased reliance on the Financial Statement because the financial institution will be using the financial statement to assess the compliance with the loan agreement.

* Due to this increased reliance on the financial statements. Material should be calculated using percentage of 3 to 4% of net...