We have audited the accompanying consolidated balance sheets of AB Manufacturing, Inc. (the Company) as of December 31, 202X and 202W, and the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flows for each of the three fiscal years in the period ended December 31, 202X, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Company at December 31, 202X and 202W, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 202X, in conformity with U.S. generally accepted auditing principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 202X, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) and our report dated March 23, 202Y expressed an unqualified opinion thereon.

Basis for Opinion

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. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the FASB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Jon Doe, Good Day CPAs

We have served as the Company’s auditor since 202X.

Arlington, Texas

March 23, 202Y

Facts: Good Day CPAs, were engaged by the board of directors of AB Manufacturing, Inc. (an issuer) with two subsidiaries to audit AB Manufacturing's calendar year 202X financial statements released and disseminated on March 23, 202Y. The above initial report was drafted by a staff accountant at the completion of the entire engagement. It was submitted to Jon Doe, the Good Day CPAs audit partner with client responsibility over the AB Manufacturing engagement, for review on March 7, 202Y, the date of completion of audit fieldwork. Doe has reviewed matters and properly concluded that an unqualified opinion was appropriate. The financial statements of AB Manufacturing for the calendar year 202V and 202W were also examined by Good Day CPAs who properly expressed unqualified opinions. The balance sheets for 202W and 202X are presented in comparative form as are the other financial statements from 202V, 202W and 202X. Good Day CPAs properly issued a separate unqualified opinion on internal controls for the year 202X, as they did also for 202V and 202W. The audit team of Jon Doe identified two critical audit matters, one, on employee benefit plans and the other on the realizability of deferred tax assets.

Instructions: Though you may assume the information contained within the initial report above is correct, the initial report submitted by the staff accountant for Doe’s review had many deficiencies. You must identify the deficiencies contained in the auditor's report above as well as indicate which paragraphs/sections contain the deficiencies. You will indicate a deficiency by circling a letter corresponding to a deficiency within a given paragraph. Below is a list of potential deficiencies that also includes all the actual deficiencies in the report above. For example, if the report was not signed then you would select the line, “Report not or incorrectly signed” and circle the letter N (since signatures are not part of a regular paragraph). Problems with paragraph headings will be considered problems of the same paragraph/section that the heading pertains to. Some deficiencies may have more than one paragraph circled on the same line. The paragraph abbreviations are: O - opinion paragraph, I - introductory paragraph, X – cross-reference paragraph, M – management’s responsibility paragraph, S – auditor’s responsibility paragraph(s), B – Basis of Opinion paragraphs(s), E – explanatory, emphasis-of-matter or other paragraph(s), C – for CAM paragraph(s), and N - deficiency is not in a paragraph but in the report heading, salutation, or closing items (e.g., signatures).  

SELECT 7 DEFICIENCIES AS WELL AS INDICATE WHICH PARAGRAPHS/SECTION CONTAINS THE DEFICIENCY BY CIRCLING THE PARAGRAPH/SECTION LETTER ON THE LINE CONTAINING THE DEFICIENCY.

Management responsibility for financial statements should not be stated O.......I ........X ....... M ...... S ........B ........E........ C........N

Report not or incorrectly signed O.......I ........X ....... M ...... S ........B ........E........ C........N

No mention of full disclosure is made O.......I ........X ....... M ...... S ........B ........E........ C........N

Reference to note should be in separate paragraph O.......I ........X ....... M ...... S ........B ........E........ C........N

Test basis should not be mentioned O ...... I ....... X....... M...... S ....... B....... E ....... C....... N

Improper or missing dual dating O.......I ........X ....... M ...... S ........B ........E........ C........N

Improper or missing reference to audit report on internal controls O.......I ........X ....... M ...... S ........B ........E........ C........N

Report is addressed to the improper party O.......I ........X ....... M ...... S ........B ........E........ C........N

Improper or missing reference to predecessor auditors O.......I ........X ....... M ...... S ........B ........E........ C........N

Improper or missing reference to GAAS O ...... I ....... X....... M...... S ....... B....... E ....... C....... N

Improper or missing reference to GAAP O.......I ........X ....... M ...... S ........B ........E........ C........N

Improper or missing reference to materiality O.......I ........X ....... M ...... S ........B ........E........ C........N

Improper or missing explanatory paragraph O.......I ........X ....... M ...... S ........B ........E........ C........N

Improper or missing responsibility of auditor O.......I ........X ....... M ...... S ........B ........E........ C........N

Should omit free from misstatement O ...... I ....... X....... M...... S ....... B....... E ....... C....... N

Improper or missing report title O.......I ........X ....... M ...... S ........B ........E........ C........N

Evaluation of overall balance sheet presentation is missing O.......I ........X ....... M ...... S ........B ........E........ C........N

Improper or missing reference to adverse or qualified opinion O.......I ........X ....... M ...... S ........B ........E........ C........N

Specific financial statements are not mentioned O.......I ........X ....... M ...... S ........B ........E........ C........N

Wrong opinion was given O ...... I ....... X....... M...... S ....... B....... E ....... C....... N

Improper or missing reference to prior years O.......I ........X ....... M ...... S ........B ........E........ C........N

Improper or missing reference to consistency O.......I ........X ....... M ...... S ........B ........E........ C........N

Dollar effect not provided O.......I ........X ....... M ...... S ........B ........E........ C........N

Improper or missing paragraph headings O.......I ........X ....... M ...... S ........B ........E........ C........N

Reference to GAAS standards should be made O ...... I ....... X....... M...... S ....... B....... E ....... C....... N

Improper or missing determination of CAM O.......I ........X ....... M ...... S ........B ........E........ C........N

Improper or missing reference to consolidation O.......I ........X ....... M ...... S ........B ........E........ C........N

Improper or missing reference to subsequent event O.......I ........X ....... M ...... S ........B ........E........ C........N

Improper or missing audit report date O.......I ........X ....... M ...... S ........B ........E........ C........N

Improper or missing pluralization in audit report O ...... I ....... X....... M...... S ....... B....... E ....... C....... N