Part A. Audit Reports For each of the following circumstances, provide the appropriate audit report. A. Number each report and indicate the type of report (i.e. qualified- scope limitation) on the same page of the report. Present all elements of the report including your signature. report. All audit reports cover two years unless indicated. Your audit report should be dated Accounting Firm."or "Report B-Independent Auditor's Reports" Prepare the following 1. The auditors were unable to obtain audited financial statements supporting the Donedeal B Underline or bold the parts of the reports that differ from the standard unqualified audit 2019 (you can assume we are reporting on the 2018 fiscal year) C. Prepare reports and labe! "Report A-Report of Independent Registered Public reports using the (Report A) or (Report B) format as indicated. Company's investment in a foreign affiliate stated at $3,000,000 and $2,500,000 at December 31, 2018 and 2017 or its equity in earnings of that affiliate of $375,000 and $350,000, which is included in net income for the years then ended as described in Note 11 to the financial statements. The auditors were not able to satisfy themselves as to the carrying value of the investment in the foreign affiliate or the equity in its earnings by other auditing procedures. The foreign affiliate represented 6% of the total assets and 9% of the earnings of the company Assume the matter does not overshadow the fairness of the financial statements or considered pervasive. The audit covers two years. The prior year's financial statements included a standard unqualified audit report. (Report A) 2 Benhere Company has stated inventories at cost in the accompanying balance sheets. Accounting principles generally accepted in the United States of America require inventories to be stated at the lower of cost or market. If the Company stated inventories at the lower of cost or market, a write down of $10,000,000 and $8,000,0000 would have been required as of December 31, 2018 and 2017, respectively. Accordingly, net income, income taxes, and stockholders' equity would have been reduced by $ 5,000,000, $2,000,000, and $4,400,000 $4,500,000, and $33,500,000, and $4,200,000, as of and for the years ended December 31, 2018 and 2017, respectively. Assume the matter does not overshadow the fairness of the financial statements or considered pervasive. (Report A) 3. The Winnie Company prepared its financial statements assuming that the company will continue to operate. Note 23 to the financial statements discusses the recurring losses from operation and the net capital deficiency. Note 13 explains management's plans in regard to these matters. The financial statements do not include any adjustments. The auditor does not challenge the report, the company's plans, nor the recoverability of assets or the amounts of the liabilities. The company is in default on its loans and there is no assurance that the company will be able to realize its recorded assets and liquidate its liabilities in the ordinary course of business. (Report A)
