Miscellaneous Audit Reports. Two independent, unrelated auditor's reports are given below. The company being reported on, in each case, is profit-oriented and publishes generalpurpose financial statements for distribution to owners, creditors, potential investors and the general public. Each of the following reports contains deficiencies.

Auditor’s Report I We have examined the consolidated balance sheet of Bell Corporation and subsidiaries as of 31 December 20X1, and the related consolidated statements of income and retained earnings and changes in financial position for the year then ended. Our examination was made in accordance with International Standards on Auditing (ISAs)

and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. We did not examine the financial statements of Seal Company, a major consolidated subsidiary. These statements were examined by other auditors whose report thereon has been furnished to us, and our opinion expressed herein, insofar as it relates to Seal Company, is based solely upon the report of the other auditors.

In our opinion, except for the report of the other auditors, the accompanying consolidated balance sheet and consolidated statements of income and retained earnings and changes in cash flows present fairly the financial position of Bell Corporation and subsidiaries at 31 December 20X1, and the results of its operations and the changes in its financial position for the year then ended, in conformity with International Accounting Standards (IASs) applied on a basis consistent with that of the preceding year.

Auditor's Report II The accompanying balance sheet of Joyeuse Corporation as of 31 December 20X1, and the related statements of income and retained earnings and changes in financial position for the year then ended were not audited by us; however, we confirmed cash in the bank and performed a general review of the statements.

During our engagement, nothing came to our attention to indicate that the aforementioned financial statements do not present fairly the financial position of Joyeuse Corporation at 31 December 20X1, and the results of its operations and the changes in its financial position for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year; however, we do not express an opinion on them.

Required

For each auditor's report describe the reporting deficiencies, explain the reasons, and briefly discuss how the report should be corrected. Each report should be considered separately. When discussing one report, ignore the other one. Do not discuss the addressee, signatures and date.
Also do not rewrite any of the auditor’s reports.
Organize your answer sheet as follows:

Transcribed Image Text:

Report Deficiency Reason No. Correction