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Requirement b. Explain the deficiencies inPatel's report as drafted.

Identify which of the following are deficiencies inPatel's report as drafted. (Select all thatapply.)

1.

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

2.

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

3.

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

4.

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

5.

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."

6.

The opinion should be qualified rather than being unmodified.

7.

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

8.

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

9.

The word material is excluded from the statement that should be part of theauditor's responsibility(free of materialmisstatement).

10.

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

11.

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

12.

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.

13.

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 introductory paragraph should identify the period of time(usually oneyear).

14.

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

15.

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.

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