Charles Marvin, CPA has completed the audit of the financial statements of Valley Equipment, Inc. as of the year ended December 31, 2016.Marvin also audited and reported on the Valley Equipment statements for the prior year.Marvin drafted the following report for 2016

We have audited the balance sheet and statement of income and retained earnings of Valley Equipment, Inc as of December 31, 2016.We conducted our audit in accordance with generally accepted accounting standards.Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from misstatement.

We believe our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly the financial position of Valley Equipment, Inc. and the results of operations for the year then ended in conformity with generally accepted auditing standards, applied on a basis consistent with those of the prior year.

Marvin and Company, CPAs

Other information:

Valley Equipment is a private corporation and is presenting comparative financial statements.

During 2016 Valley Equipment acquired Erie Corporation and the effects of the acquisition are correctly in the financial statements and disclosed in the notes to the statements.

Marvin was unable to perform normal accounts receivable confirmation procedures for accounts that are material but not pervasive to the financial statements.Unfortunately, Marvin was unable to perform alternative procedures to support the existence of the receivables.

Valley Equipment is the defendant in a litigation where there is a reasonable possibility, according to their attorney, that they may have to pay a substantial amount of cash which might require the sale of certain fixed assets.Because management does not want to provide any information that plaintiff might use against them there are no disclosures.

Valley Equipment issued debentures in 2016 in the amount of 10 million dollars.The funds were used for plant expansion.The debenture agreement restricts cash dividends until the debt is paid off.

Required:explain ten deficiencies in the Marvin report as drafted.