$18-7$ An Opinion Based on Agreed$-$Upon Procedures

Management often calls for an independent auditor$$s assistance. For example, an audit client$$s management might request that their auditor apply agreed$-$upon procedures to some but not all of the financial statement accounts of a company that management considers a serious candidate for acquisition. Assume that Uclean Corporation, an audit client, has requested that your firm perform agreed$-$upon procedures at Ajax Corporation. At the completion of the engagement, an audit assistant prepared the following report for your review:

We have applied certain agreed$-$upon procedures, as discussed below, to accounting records of Ajax

Corporation, as of December $31,2007,$ solely$-$to assist Uclean Corporation in connection with the proposed acquisition of Ajax Corporation.

We have examined the cash in bank and accounts receivable of Ajax Corporation as of December $31,2007,$ in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.

In our opinion, the cash and receivables referred to above are presented fairly, in all material respects, as of December $31,2007,$ in conformity with generally accepted accounting principles. We therefore recommend that Uclean Corporation acquire Ajax Corporation pursuant to the proposed agreement.

Required: Comment on the proposed report, describing those assertions that are:

$1.$ Incorrect or should otherwise be deleted.

$2.$ Missing and should be inserted.