You are the senior partner of a large, local audit firm. In reviewing the work of a junior staff member on a compilation engagement for Greasemonkey's Delight Inc., a local autoparts store (in which your brother-in-law is the CFO), you notice that she has written the following rough draft for an engagement report:

Discuss the potentially misleading or deficient statements in this report. What other information do you need to know before issuing a compilation report?

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Audit Report We have compiled the accompanying balance sheet of Greasemonkey's Delight Inc. as of December 31, 2007, and the related statements of income, retained earnings, and cash flows for the year then ended, in accordance with generally accepted accounting standards. To the best of our knowledge, the compilation was done faithfully according to Statements on Standards for Accounting and Review Services issued by the AICPA. A significant amount of effort was expended on the engagement and, as such, we believe that the financial state- ments match what we were given.