Consider the following auditor's report that refers to a shared engagement of a privatelyheld organization:

Discuss the deficiencies with this audit report.

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Independent Auditor's Report To the Board of Directors of Martin Co. We have audited the accompanying balance sheets of Martin Co. as of December 31, 2007 and 2006, and the related statements of income, retained earnings, and cash flows for the years then ended. These financial statements are the responsibility of Martin Co.'s management. Our responsibility is to express an opinion on these financial statements based on our audit. However, another audit firm, with more expertise in this area, performed the substantive tests on the inventory balances. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance that the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, based on our audit, the financial statements referred to above present fairly, in all material respects, the financial position of Martin Co. as of December 31, 2005 and 2004, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. Ed's Accounting Firm and Wash-a-Teria April 1, 2008