18-28 The following auditors report was drafted by a staff accountant of Nathan and Matthew, CPAs, at the completion of the audit of the comparative inan- cial statements of Monterey Partnership for the years ended December 31, 2013 and 2012. Monterey is a privately held company that prepares its inan- cial statements on the income tax basis of accounting. The report was sub- mitted to the engagement partner, who reviewed matters thoroughly and properly concluded that an unmodiied opinion should be expressed. The draft of the report prepared by a staff account is as follows: Auditors Report We have audited the accompanying inancial statements of Monterey Partnership, which comprise the statements of assets, liabilities, and capitalincome tax basis as of December 31, 2013, and the related statements of revenue and expensesincome tax basis and of changes in partners capital accountsincome tax basis for the year then ended, and the related notes to the inancial statements. Auditors Responsibility We conducted our audit in accordance with standards established by the AICPA. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the inancial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the inancial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the inancial statements, whether due to fraud or error. An audit also includes evaluating the appropriateness of accounting policies used as well as evaluating the overall presentation of the inancial statements. We believe that the audit evidence we have obtained is suficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the inancial statements referred to above present fairly, in all material respects, the assets, liabilities, and capital of Monterey Partnership as of December 31, 2013, and its revenue and expenses and changes in part- ners capital accounts for the year then ended in conformity with generally accepted accounting principles applied on a consistent basis. Basis of Accounting We draw attention to Note 2 of the inancial statements, which describes the basis of accounting. The inancial statements are prepared on the basis

of accounting the Partnership uses for income tax purposes. Accordingly, these inancial statements are not designed for those who do not have access to the Partnerships tax returns. Our opinion is not modiied with respect to this matter. Nathan and Matthew, CPAs April 3, 2014 Required: Identify the errors and omissions in the auditors report as drafted by the staff accountant. Group the errors and omissions by paragraph, where applicable. Do not redraft the report.