Assume that you are a recent graduate with a BBA and master’s in accounting. You joined the Auditing Group
at Price and Waters as a junior Auditor five months ago, and you are eager to make your mark as an aspiring
professional. The firm is located at 4591 Orange Blossom Drive, Winter Garden, Florida 34784. The audit
partner who supervises your group is Alan Spinner, MA CPA. One of your peers in the same auditing Group,
Sherise Baldwin took ill, and the team manager, Joan Marker, asked you to perform some of her
responsibilities until she returns. In particular, she asked you to review the draft of the Auditor’s Report that she
was responsible for preparing and which is due in five days. From your brief interactions with Sherise, you
found her to be a brash social climber who took no prisoners. In examining the file, this is what you found for
Allidabar Inc., the publicly traded USA company whose audit as of December 31, 2019 and 2020 were just
completed.
To the shareholders and the board of directors of Allidabar Inc.
Report of Independent Registered Public Accounting Firm
We have audited the accompanying balance sheets of X Company as of December 31,20x2 and 20X1, and the
related statements of income, retained earnings and cash flows or 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.
We conducted our audits in accordance with the standards of the Public Company Oversight Accounting
Board. Those standards require that we plan and perform the audit to obtain reasonable assurance about
these financial statements. We believe that our audits provide a reasonable basis for our opinions.
The financial statements referred to above present fairly, in all material respects, the financial position of the
Company as of December 31, 20X2 and 20X1 and the results of its operations and its cash flows for the years
then ended in conformity with the accounting principles generally accepted in the United States.
Required: (a) Write a memo to yourself indicating the changes are necessary to conform the report thoroughly
with current standards. (b) Would you disclose the Baldwin draft as well as your corrections to Ms. Marker?
Justify your answer.
Sample Solution