Superior Fitness Limited (SFL) | Download for quality grades |

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Superior Fitness Limited (SFL) operates a chain of 12 upscale fitness clubs located in and around the Greater Toronto Area. SFL offers some of Canada’s most luxurious, modern and high-tech fitness... facilities. SFL was founded in 1989 and was purchased from the original owner in December 2008 by Devon Clemens, a retired professional athlete. Devon believed the fitness club business had strong growth potential and was a good fit with his athletic background. Devon was impressed that a new fitness club opens every three months in Ontario. Having exhausted his own savings to purchase the shares of SFL, Devon approached a bank to obtain financing to open two additional clubs. The loan agreement requires that SFL provide financial statements prepared in accordance with current Canadian generally accepted accounting principles for its year ended September 30, 2010 and include an unqualified audit report. SFL has never been audited. As a result, in June 2010, Devon approached your firm, Body & Builder LLP (B&B) for assistance. B&B has accepted the SFL audit engagement and you have been assigned the role of audit senior. It is now July 4, 2010 and you are meeting with the audit partner, Rosie Garcia, to discuss the engagement. Rosie begins, “Devon is unsophisticated when it comes to financial matters. He relies entirely on the bookkeeper to prepare the financial statements and is counting on us to let him know as soon as possible if there are any significant accounting issues that would not allow us to issue an unqualified opinion. The bookkeeper is competent but does not have an accounting designation and has not kept up to date on all the recent changes in Canadian GAAP.” [Show More]

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