You are representing Lily & An, Ltd., a CPA firm in San Jose.

During the fourth quarter of 2022, the Board of Directors of Weworked (a private company), an auto parts supply company with 300 stores in the United States, discovered that the CFO and the controller had embezzled approximately $20 million of Company assets and concealed the fraud by falsifying accounting records.

The Board of Directors fired the CFO and controller and hired a new management team. You were appointed as the new auditor and were engaged to audit the balance sheet as of 12/31/2022. Management attempted to pull together fixed asset records; however, copies of invoices were misplaced and transfers between stores and dispositions were not tracked.

Management was successful in identifying the misstatements in accounts receivable and inventory but not fixed assets. The December 31, 2022 balance sheet was adjusted to eliminate the misstatements noted during your audit.

After all the known misstatements had been detected, management became aware that the company might not be able to remain in business for the next year (2023). You concur with the management that there is substantial doubt about an entity's ability to continue as a going concern. You have decided not to issue a disclaimer.

The balance sheet as of 12/31/2022 includes the following disclosures:

1. description of the fraud that had taken place and the actions taken by the new management team (Note 10).

2. The uncertainty regarding the viability of the Company (Note 10).

3. Management's belief that after all the adjustments had been recorded, all the balance sheet accounts as of 12/31/2022, except for fixed asset accounts, were presented in accordance with generally accepted accounting principles.

4. A statement that management could not determine if fixed assets as of 12/31/2022 were presented in accordance with generally accepted accounting principles(Note 10).

5. During 2022, Weworked changed its method of accounting for the depreciation of the long-term assets from straight line to double-declining balance. CPA firm concurs with management's justification for making the change. Note 12 to the financial statements discussed this matter.

After completing your audit, you agree with each of the disclosures described above by the management.

You gathered sufficient and appropriate audit evidence as of March 10, 2023 with the planned report release date of March 15, 2023.

Requirement:

Draft a complete audit report based on the facts listed above, including the title, the body, the name of the CPA firm, and the date of the audit report. Do not include Key Audit Matter or Critical Audit Matter section in the audit report.