Robertson Company, a public entity, was audited by the audit firm of Hicks, CPA, at year-end, December 31, 2025, along with their subsidiary company of Jackson Company, in another state. Hicks hired Brown, CPA, to perform the audit on Jackson Company, and accepts responsibility for the work of Brown. Hicks will share responsibility and make reference to the component auditors. Robertson Company had accounts receivable of $200,000 on December 31, 2020, and had provided an allowance for uncollectible accounts of $6,000. After performing all routine auditing procedures relating to the receivables and the valuation allowance, the independent auditors were satisfied that this asset was fairly stated and that the allowance for uncollectible accounts was adequate. Just before the completion of the audit fieldwork late in February, however, the auditors learned that the entire plant of Thompson Corporation, a major customer, had been destroyed by a flood early in February and that, as a result, Thompson Corporation was hopelessly insolvent. The account receivable from Thompson Corporation of $44,000 originated on December 28; terms of payment were net 60 days. The receivable had been regarded as entirely collectible on December 31, and the auditors considered it in reaching their conclusion regarding the adequacy of the allowance for uncollectible accounts. In discussing the news concerning the flood, the controller of Roberson Company emphasized to the auditors that the probable loss of $44,000 should be regarded as a loss of the following year and not of 20X0, the year under audit.

After reading the scenario above, answer the following questions:

Discuss the type of report and any circumstances that would affect the audit report.

To finish the assignment, each group participant will individually construct the audit report following the guidelines on page 747 of the textbook, make any changes needed for the correct audit opinion paragraphs.

Additional information:

Assume the internal audit opinion was unmodified.

The date of the audit opinion report should be February 15