An audit report prepared by Garrett and Brown, CPAs, is provided below. The audit for the year ended December 31, 2012 was completed on March 1, 2013, and the report was issued to Javlin Corporation, a private company, on March 13, 2013. List any deficiencies in this report. Do not rewrite the report.

We have examined the accompanying financial statements of Dalton Corporation as of December 31, 2012. These financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these statements based on our audit.

We conducted our audit in accordance with generally accepted accounting principles. Those principles require that we plan and perform the audit to provide reasonable assurance about whether the financial statements are free of misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, except for the effects of not capitalizing certain lease obligations that should be capitalized in order to conform with generally accepted accounting principles, the financial statements referred to above present accurately the financial position of Jacob Corporation as of December 31, 2012, in conformity with accounting principles generally accepted in the United States of America.

Garrett and Brown, CPAs

March, 2013

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19) Describe the standard unqualified report to be issued for an audit of a private company. Begin by specifying the seven parts of the report, and then discuss the contents of each part.

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20) Presented below is an independent auditor’s report for a private company prepared by the firm of Harrington and Perry, LLP.

Auditor’s Report

To the president and management of EPM, Inc.

We have examined the accompanying balance sheets and statements of income, retained earnings, and cash flows of EPM, Inc., as of December 31, 2012 and 2011. We performed our examination in accordance with auditing standards generally accepted in the United States of America and examined, on a test basis, evidence supporting the accounting principles used and estimates made by management.

In our opinion, the financial statements referred to above accurately present the financial position of EPM, Inc., in conformity with generally accepted accounting principles.

Harrington and Perry, LLP

December 31, 2012

Other information:

EPM, Inc., is a for-profit corporation and publishes comparative financial statements for distribution to shareholders, potential investors, and the general public. The client has a calendar year-end. For the most recent audit, the auditor completed all significant fieldwork on March 5, 2013 and issued the audit report on March 16, 2013. During 2012, EPM changed its method of depreciating long-term assets and properly reflected the effect of the change in the current year’s financial statements, restated the prior year’s financial statements, and properly discussed the change in a footnote (Note 4) to those statements. The auditors are satisfied that the change was preferable.

Required:

Consider all the facts given and rewrite the complete auditor’s report, including report title, address, body of report, name of firm, and audit report date.

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21) The financial statements most commonly audited by external auditors are the balance sheet, the income statement, and the statement of changes in retained earnings.

A)

True 

B) False

22) AICPA professional standards provide uniform wording for the auditor’s report to enable users of the financial statements understand the audit report.

A) True 

B) False

23) Users of the financial statements rely on the auditor’s report because it provides absolute assurance 10 the report provides.

A) True

B) False

24) The introductory paragraph of the auditor’s report states that the auditor is responsible for the preparation, presentation and opinion on financial statements.

A)
True 

B) False

25) The audit report date is the date the auditor completed audit procedures in the field.

A) True

B) False

26) Audit reports issued for financial statements of a public company should refer to generally accepted auditing standards in the scope paragraph.

A) True 

B) False

27) Audit reports issued for financial statements of a private company should refer to generally accepted auditing standards in the scope paragraph.

A) True 

B) False