Q Company is a gas distribution company that is regulated by the state public service commission. The commission must approve all rate changes made by Q Company, but Q Company is allowed to collect higher rates subject to refund in the event they are disapproved subsequently by the commission. During the year ended September 30, 19X5, Q Company increased its rates to its customers and collected an additional \($2,000,000\), a material amount. You have completed your audit of Q Company in November, and the state public service commission has not yet approved or disapproved the rate increase.

a. Explain the reporting problem involved in the case.

b. Draft an audit report that you will issue covering two years.