Question
The following tentative auditor's report was drafted by a staff accountant and submitted to a partner in the accounting firm of Better & Best, CPAs:
The following tentative auditor's report was drafted by a staff accountant and submitted to a partner in the accounting firm of Better & Best, CPAs:
AUDIT REPORTTo the Audit Committee of American Broadband, Inc.We have examined the consolidated balance sheets of American Broadband, Inc. and subsidiaries as of December 31, 2011 and 2010, and the related consolidated statements of income, retained earnings, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. Our audits were made in accordance with auditing standards generally accepted in the United States of America as we considered necessary in the circumstances. Other auditors audited the financial statements of certain subsidiaries and have furnished us with reports thereon containing no exceptions. Our opinion expressed herein, insofar as it relates to the amounts included for those subsidiaries, is based solely upon the reports of the other auditors. As fully discussed in Note 7 to the financial statements, in 2011, the company extended the use of the last-in, first-out (LIFO) method of accounting to include all inventories. In examining inventories, we engaged Dr. Irwin Same (Nobel Prize winner 2009) to test check the technical requirements and specifications of certain items of equipment manufactured by the company. In our opinion, the financial statements referred to above present fairly the financial position of American Broadband, Inc. as of December 31, 2011, and the results of operations for the years then ended, in conformity with accounting principles generally accepted in the United States of America. To be signed by Better & Best, CPAs March 1, 2012
Required
Identify deficiencies in the staff accountant's tentative report that constitute departures from the generally accepted standards of reporting.*
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