An audit report prepared by Smithson and Gerard, CPA is shown below. The audit for the year ended December 31, 2007 was completed on March 17, 2008, and the report was issued to Jacob Corporation, a private company, on April 3, 2008. List any deficiencies in this report. Do not rewrite the report. At least ten deficiencies should be identified

We have examined the accompanying financial statements of Dalton Corporation as of December 31, 2007. These financial are the responsibility of the companys management. Our responsibility is to express an opinion on these statements based on our audit.

We conducted our audit in accordance with the generally accepted accounting principles. Those principles require that we plan and perform the audit to provide reasonable assurance about whether the statements are free of misstatements. 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 obligation that should be capitalized in order to conform with generally accepted accounting principles, Jacob corporation as of December 31, 2005 in conformity with accounting principles generally accepted on the United States of America.

Smithson and Gerard, CPAs

March, 2008