You were recently appointed to a committee formed by the state CPA society to investigate possible substandard reporting practices. The following report was submitted to the committee, and, as the newest member of the committee, you were asked to make the initial review of the report and to give the committee your recommendations.

We have examined the balance sheet and related statements of income and expense and surplus of Holly Corporation as of March 31, 19X9. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion based on our audit.

We conducted our audit in accordance with generally accepted accounting principles. These principles require that we perform the audit to obtain reasonable assurance about whether the financial statements are free of 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, the accompanying balance sheet and related statements of income and expense and surplus present fairly the financial position of Holly Corp., as of March \(31,19 \times 9\), in conformity with generally accepted accounting principles.

State whether or not you would recommend to the committee that the audit report be found to be in violation of generally accepted auditing standards of reporting, and if so, why.