On September 23, 2024, Betsy Ross drafted the following report on Continental Corporation’s (a non issuer) financial statements.

Required:

List and explain the deficiencies and omissions in the report prepared by Ross on Continental Company’s financial statements. (Assume that Ross was not engaged to communicate key audit matters.)

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To Whom It May Concern: Report on the Audit of the Financial Statements Opinion We have audited the accompanying financial statements of Continental Corporation, which comprise the balance sheet as of July 31, 2024, and the related statements of income and changes in shareholders' equity for the year then ended, and the related notes to the financial statements. In our opinion, with the explanation given below and with the exception of some minor errors we consider immaterial, the accompanying financial statements present the financial position of Continental Corporation as of July 31, 2024, and the results of its operations and its cash flows for the year then ended in accordance with pronouncements of the Financial Accounting Standards Board. Basis for Opinion In accordance with instructions by Continental's management, we have conducted a complete audit. Our responsibili- ties under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial State- ments section of our report. We are required to be independent of Continental Corporation and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Emphasis of Matter In many respects, this was an unusual year for Continental Corporation. The weakening of the economy in the early part of the year and the strike of plant employees in the summer led to a decline in sales and net income. After making sev- eral tests of the sales records, nothing came to our attention that would indicate sales have not been properly recorded. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Continental Corporation's ability to continue as a going concern for one year following the issuance of the financial statements. Auditor's Responsibilities for the Audit of the Financial Statements Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are con- sidered material if, individually or in the aggregate, they could reasonably be expected to influence the economic deci- sions of users made on the basis of these financial statements. In performing an audit in accordance with GAAS, we: [Standard report language on professional judgment and skepticism, risks of misstatement, internal control, accounting policies and estimates, and going concern] We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit. Betsy Ross & Co, CPA Philadelphia, PA July 31, 2024