For any items that you answer"No" to in the"Needed inAuditor's Report?"column, select the letter corresponding to the explanation(from the listprovided) as to why the item is not needed. If you select"Yes" to identify an item that is needed in theauditor's report, select"n/a" in the explanation column. LOADING...(Clickthe icon to view the list of possible explanations for why an item might not be needed in theauditor's report.)

		Needed inAuditor's Report?	Explanation if not needed in report
bullet	Bellamy is a private corporation and is presenting comparative financial statements.	Yes	n/a

bullet

Bellamy does not wish to present a statement of cash flows for either year.

Yes Yes No

n/a a. b. c. d. e. f. n/a

bullet

During2013, Bellamy changed its method of accounting forlong-term construction contracts and properly reflected the effect of the change in the currentyear's financial statements and restated the prioryear's statements. Patel is satisfied withBellamy's justification for making the change. The change is discussed in footnote 12.

Yes Yes No

n/a a. b. c. d. e. f. n/a

bullet

Patel was unable to perform normal accounts receivable confirmationprocedures, but alternative procedures were used to satisfy Patel as to the existence of the receivables.

Yes Yes No

n/a a. b. c. d. e. f. n/a

bullet

Bellamy Corporation is the defendant in alitigation, the outcome of which is highly uncertain. If the case is settled in favor of theplaintiff, Bellamy will be required to pay a substantial amount ofcash, which might require the sale of certain fixed assets. The litigation and the possible effects have been properly disclosed in footnote 11.

Yes Yes No

n/a a. b. c. d. e. f. n/a

bullet

Bellamy issued debentures on January31, 2012, in the amount of$10 million. The funds obtained from the issuance were used to finance the expansion of plant facilities. The debenture agreement restricts the payment of future cash dividends to earnings after December31, 2017. Bellamy declined to disclose this essential data in the footnotes to the financial statements.

Yes Yes No

n/a a. b. c. d. e. f. n/a

You chose yes or no and for next part a,b,c,d,e,f or n/a for the explanation

This other information included in the question

Other Information

bullet	Bellamy is a private corporation and is presenting comparative financial statements.
bullet	Bellamy does not wish to present a statement of cash flows for either year.
bullet	During2013, Bellamy changed its method of accounting forlong-term construction contracts and properly reflected the effect of the change in the currentyear's financial statements and restated the prioryear's statements. Patel is satisfied withBellamy's justification for making the change. The change is discussed in footnote 12.
bullet	Patel was unable to perform normal accounts receivable confirmationprocedures, but alternative procedures were used to satisfy Patel as to the existence of the receivables.
bullet	Bellamy Corporation is the defendant in alitigation, the outcome of which is highly uncertain. If the case is settled in favor of theplaintiff, Bellamy will be required to pay a substantial amount ofcash, which might require the sale of certain fixed assets. The litigation and the possible effects have been properly disclosed in footnote 11.
bullet	Bellamy issued debentures on January31, 2012, in the amount of$10 million. The funds obtained from the issuance were used to finance the expansion of plant facilities. The debenture agreement restricts the payment of future cash dividends to earnings after December31, 2017. Bellamy declined to disclose this essential data in the footnotes to the financial statements.

THese are the explanations you choose from or n/a.

Explanation of why information need not be included in the auditreport:

a.	Bothyears' statements will be referred to in the audit report.
b.	The statement of cash flows is not a required schedule of the financial statements.
c.	Specific description of the change in method of accounting forlong-term construction contracts need not be included in the report since it is discussed in the footnotes.But, theauditor's report must state that there is a change in accounting principles and refer to the footnote.
d.	The fact that normal receivable confirmation procedures were not used should not be disclosed since the auditor was able to satisfy him or herself through alternative audit procedures.
e.	The lawsuit need not be discussed in the report since it has been included in a footnote.
f.	The dividend payment restrictions need not be disclosed as it does not affect theassets, liabilities, or equities of the company as of the date of the financial statements.

Requirement b. Explain the deficiencies inPatel's report as drafted.Identifywhich, of thefollowing, are deficiencies inPatel's report as drafted. (Select all thatapply.)You can highlight from 1-14 the right answers below is the information you need to do it.

this the report

We have audited the balance sheet and statements of income and retained earnings of Bellamy Corporation as of December31, 2013. 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 of misstatement. We believe that our audits provide a reasonable basis for our opinion. In ouropinion, the financial statements referred to above present fairly the financial position of Bellamy Corporation as of December31, 2013, and the results of its operations for the year then ended in conformity with generally accepted auditingstandards, applied on a basis consistent with those of the preceding year. Patel, CPA (Signed)

1.

The opinion should be qualified rather than being unqualified.

2.

The balance sheet is as of a specificdate, whereas the income statement and the statement of retained earnings are for a period of time. The scope paragraph should identify the period of time.

3.

There is no separate scope paragraph that describes what an audit is. Two required sentences are completelyomitted: "An audit includesexamining, on a testbasis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statementpresentation."

4.

There is no mention in the report that Bellamy Corporation is a defendant in a litigation.

5.

The audit was made in accordance with auditing standards generally accepted in the United States of America rather than generally accepted accounting standards.

6.

The opinion paragraph states that accounting principles were consistent with those used in the prior year. The opinion paragraph should make no reference to consistency.

7.

The opinion paragraph includes the words"generally accepted auditingstandards" rather than the phrase"accounting principles generally accepted in the United States ofAmerica."

8.

The opinion paragraph excludes the requiredphrase, "in all materialrespects."

9.

There is no mention in the report that Bellamy is a private corporation.

10.

An additional paragraph should be included which describes the dividend restrictions and the refusal of the client to present a statement of cash flows.

11.

The word material is excluded from the scope paragraph(free of materialmisstatement).

12.

There are comparativestatements, but the audit report identifies and deals with only the currentyear's financial statements. An opinion must also be included for the prior period financial statements.

13.

A separate paragraph should be included stating that generally accepted accounting principles were not consistently applied.

14.

The audit report is neither addressed nor dated and it does not contain a title.

15.

There is no separate introductory paragraph that states the financial statementsaudited, dates, and the responsibilities of management and the auditor.

Click to select your answer(s).