Unqualified Audit Report. Upon completion of all field work on 23 September 20X1, the following audit report was rendered by Alexander Dlouhy, Auditor, to the directors of Rabochaya Raum Company of Docesky, the Czech Republic.

To the Directors of The Rabochaya Raum Company:

We have examined the balance sheet and the related statement of income and retained earnings of The Rabochaya Raum Company as of 31 July 20X1. In accordance with your instructions, a complete audit was conducted.

In many respects, this was an unusual year for The Rabochaya Raum Company. The weakening of the economy in the early part of the year and the strike of plant employees in the summer of 20X1 led to a decline in sales and net income.

After making several tests of sales records, nothing came to our attention that would indicate that sales have not been properly recorded.

In our opinion, with the explanation given above, and with the exception of some minor errors that are considered immaterial the aforementioned financial statements present fairly the financial position of the Rabochaya Raum Company at 31 July 20X1, and the results of its operations for the year then ended, in conformity with pronouncements of International Accounting Standards Committee applied consistently throughout the period.

Alexander Dlouhy, Auditor 23 September 20X1

Required

List and explain the deficiencies and omissions in the auditor's report. Organize your answer sheet by paragraph (scope, explanatory and opinion) of the auditor’s report.