Presented below is an independent auditor's report that contains deficiencies. The corporation being reported on is profit oriented and publishes general-purpose financial statements for distribution to owners, creditors, potential investors, and the general public. We have examined the consolidated balance sheet of Belleno Corporation and subsidiaries as of December 31, 19X0, and the related consolidated statements of income and retained earnings and changes in financial position for the year then ended. Our examination was made in accordance with generally accepted auditing standards and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.

We did not examine the financial statements of Seidel Company, a major consolidated subsidiary. These statements were examined by other auditors whose report thereon has been furnished to us, and our opinion expressed herein, insofar as it relates to Seidel Company, is based solely upon the report of the other auditors.

In our opinion, except for the report of the other auditors, the accompanying consolidated balance sheet and consolidated statements of income and retained earnings and changes in financial position present fairly the financial position of Belleno Corporation and subsidiaries at December 31, 19X0, and the results of its operations and the changes in its financial position for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year.

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Describe the reporting deficiencies, explain the reasons therefor, and briefly discuss how the report should be corrected. Do not discuss the addressee, signatures, and date. Also, do not rewrite the foregoing auditor's report. Organize your answer sheet as follows:

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Deficiency Reason Correction