• York University

• ADMS 4553

Superior Fitness Limited (SFL)

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