Roscoe, \(\mathrm{CPA}\), has completed the examination of the financial statements of Excelsior Corporation as of and for the year ended December 31, \(19 \times 1\). Roscoe also examined and reported on the Excelsior financial statements for the prior year. Roscoe drafted the following report for \(19 \times 1\).

March \(15,19 \times 2\)

We have examined the balance sheet and statements of income and retained earnings of Excelsior Corporation as of December 31, 19X1. Our examination was made in accordance with generally accepted accounting standards and accordingly included such tests of the accounting records as we considered necessary in the circumstances.

In our opinion, the above mentioned financial statements are accurately prepared and fairly presented in accordance with generally accepted accounting principles in effect at December 31, \(19 \times 1\).

Roscoe, CPA

(Signed)

Other information:

1. Excelsior is presenting comparative financial statements for \(19 \times 1\) and \(19 \times 0\).

2. Excelsior does not wish to present a statement of changes in financial position for either year.

3. During 19X1, Excelsior changed its method of accounting for long-term construction contracts and properly reflected the effect of the change in the current year's financial statements and restated the prior-year's statements. Roscoe is satisfied with Excelsior's justification for making the change. The change is discussed in footnote number 12.

4. Roscoe was unable to perform normal accounts receivable confirmation procedures but alternate procedures were used to satisfy Roscoe as to the validity of the receivables.

5. Excelsior Corporation is the defendant in a litigation, the outcome of which is highly uncertain. If the case is settled in favor of the plaintiff, Excelsior will be required to pay a substantial amount of cash which might require the sale of certain fixed assets. The litigation and the possible effects have been properly disclosed in footnote number 11.

6. Excelsior issued debentures on January 31, 19X0, in the amount of \(\$ 10,000,000\). The funds obtained from the issuance were used to finance the expansion of plant facilities. The debenture agreement restricts the parment of future cash dividends to earnings after December \(31,19 \times 6\). Excelsior declined to disclose this essential data in the foot notes to the financial statements.

Réquired:

Consider all facts given and rewrite the auditor's report in acceptable and complete format incorporating any necessary departures from the standard report.

Do not discuss the draft of Roscoe's report but identify and explain and items included in "Other Information" that need not be part of the au ditor's report.