The following report was drafted by a staff assistant at the completion of the review engagement of GLM Company, a continuing client, for the year ended September 30, 19X8. The financial statements for the year ended September \(30,19 X 7\), which were also reviewed, contained a departure from generally accepted accounting principles that was properly referred to in the \(19 \mathrm{X} 7\) review report dated October 26, 19X7. The \(19 \mathrm{X} 7\) financial statements have been restated.

{To the Board of Directors of GLM Company:}

We have reviewed the accompanying balance sheets of GLM Company as of September 30, 19X8 and 19X7, and the related statements of income and retained earnings for the years then ended, in accordance with generally accepted auditing standards. All information included in these financial statements is the representation of the management of GLM Company.

A review consists principally of inquiries of company personnel. It is substantially less in scope than an audit, but more in scope than a compilation. Accordingly, we express only limited assurance on the accompanying financial statements.

Based on our reviews, with the exception of the matter described in the following paragraph, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with generally accepted accounting principles applied on a consistent basis.

In its \(19 \mathrm{X} 7\) financial statements the company stated its land at appraised values. However, as disclosed in note \(\mathrm{X}\), the company has restated its 19X7 financial statements to reflect land at cost.

{November 2, 19X8}

Required:

Identify the deficiencies in the draft of the proposed report on the comparative financial statements. Group the deficiencies by paragraph. Do not redraft the report.