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The report of an Independent Registered Public Firm contained the following. “ In our opinion the consolidated financial statements referred to above present fairly, in all material respects, the financial position of The Miranda Company and subsidiaries, as of December 31, 2022 and 2021 as results of their operations and their
This is an Adverse Opinion issued by the auditing firm to The Miranda Company.
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- Independent Auditor's ReportWe have audited the consolidated financial statements of Concord, Inc., and subsidiaries as of September 30, 2019,and the related consolidated statements of income, changes in stockholder's equity and cash flows for the year 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 did not audit the financial statements of Biotherm, Inc., a wholly-owned subsidiary, which statements reflect total assets and revenues constituting 22%and 20% respectively at September 30, 2019 of the consolidated totals. Those statements were audited by Ball &Brown, CPAs, whose reports have been furnished to us, and our opinion, insofar as it relates to the amountsincluded for Biotherm, Inc. is based solely on their report.We conducted our audit in accordance with generally accepted auditing standards. Those standards require thatwe plan and…Common Law Liability to Third Parties. Flacco, CPA, conducted the audit of RavenCompany and issued an unmodified opinion that concluded that the financial statementspresented its financial condition, results of operations, and cash flows according to GAAP.As part of the preaudit conference, Flacco was informed by Raven’s management that itsaudited financial statements would be presented to Baltimore National Bank to securefinancing for a significant expansion opportunity.Using these financial statements, as well as Flacco’s opinion on those statements, Ravenobtained financing from the following parties: (1) Baltimore National Bank, (2) RegionalState Bank, and (3) Maryland Equity Partners (a private equity firm). Each of these partiesspecifically requested audited financial statements and relied on these statements in providing financing to Raven. Six months after obtaining financing, Raven’s financial conditionworsened, and it declared bankruptcy, forcing Raven to default on its…The auditor’s report contains the following: “We did not audit the financial statementsof EZ, Inc., a wholly owned subsidiary, which statements reflect total assets and revenuesconstituting 27 percent and 29 percent, respectively, of the consolidated totals. Thosestatements were audited by other auditors whose report has been furnished to us, andour opinion, insofar as it relates to the amounts included for EZ, Inc., is based solely onthe report of the other auditors.” These sentences(1) indicate a division of responsibility.(2) assume responsibility for the other auditor.(3) require a departure from an unqualified opinion.(4) are an improper form of reporting.
- When financial statements are presented in comparative form and another firm audited the prior years’ financial statements (but the other firm’s report is not presented with the financial statements), the auditors’ report on the current-year financial statements shoulda. Disclaim an opinion on the prior years’ financial statements.b. Not refer to the prior years’ financial statements.c. Refer to any procedures performed by the current auditor to verify the opinion on the prior years’ financial statements.d. Refer to the report and type of opinion issued by the other firm on the prior years’ financial statements.The draft statement of financial position of Holm PLC includes an amount of GHS 60,000 owed by Paulina PLC. The total assets of Holm PLC are GHS 40 million.The auditor has obtained the following audit evidence:• Paulina PLC is controlled by the chairman of Holm PLC, who is its majority shareholder.• The draft financial statements of Holm PLC do not provide any disclosures about the GHS 60,000 transaction, on the grounds that it is immaterial.• There is no information about the nature of the transaction, but the GHS 60,000 had been included in receivables at the end of the previous financial year.RequiredWhat further measures should the auditor take?Various Reporting Situations. Assume that the auditors encountered the following separate situations when deciding on the report to issue for the current-year financial statements.1. The auditors decided that sufficient appropriate evidence could not be obtained to complete the audit of significant investments the entity held in a foreign entity.2. The entity failed to capitalize lease assets and obligations but explained them fully in the notes to the financial statements. These lease obligations meet the criteria for capitalization under ASC 840.3. The entity is defending a lawsuit on product liability claims. (Customers allege that power saw safety guards were improperly installed.) All facts about the lawsuit are disclosed in the notes to the financial statements, but the auditors believe the entity should record a loss based on a probable settlement mentioned by the entity’s attorneys. 4. The entity hired the auditors after taking inventory on December 31. The accounting records…
- 30. Below Auditors’ Report for Al-Hashaar Company : Independent Auditor’s Report To the Audit Committee of Al-Hashaar Company We have audited the accompanying consolidated balance sheets of Al-Hashaar Company and its subsidiaries, as of December 31, 2020 and 2019, and the related consolidated statements of income, retained earnings, and cash flows for the years then ended. Management's Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the Sultanate of Oman; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor's ResponsibilityOur responsibility is to express an opinion on these consolidated financial statements based on our audit.…Sorrell, CPA, is auditing the financial statements of Van Dyke as of December 31, 2017. Sorrell’s substantive procedures and other tests indicated that Van Dyke’s financial statements were prepared in accordance with generally accepted accounting principles and, accordingly, Sorrell expressed an unqualified opinion on those financial statements. Because Van Dyke’s securities are registered with the Securities and Exchange Commission, Van Dyke is subject to the reporting requirements of AS 2201. During its assessment of internal control over financial reporting, Van Dyke’s management identified material weaknesses relatedto (1) the method of accounting for sales commissions and (2) separation of duties related to purchase transactions. Sorrell was able to gather sufficient evidence and did not encounter limitations with respect to the evaluation of Van Dyke’s internal control over financial reporting. Sorrell prepared the following draft report on Van Dyke’s internal control…30. Below Auditors’ Report for Al-Hashaar Company : Independent Auditor’s Report To the Audit Committee of Al-Hashaar Company We have audited the accompanying consolidated balance sheets of Al-Hashaar Company and its subsidiaries, as of December 31, 2020 and 2019, and the related consolidated statements of income, retained earnings, and cash flows for the years then ended. Management's Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the Sultanate of Oman; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor's ResponsibilityOur responsibility is to express an opinion on these consolidated financial statements based on our audit.…
- 30. Below Auditors’ Report for Al-Hashaar Company : Independent Auditor’s Report To the Audit Committee of Al-Hashaar Company We have audited the accompanying consolidated balance sheets of Al-Hashaar Company and its subsidiaries, as of December 31, 2020 and 2019, and the related consolidated statements of income, retained earnings, and cash flows for the years then ended. Management's Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the Sultanate of Oman; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor's ResponsibilityOur responsibility is to express an opinion on these consolidated financial statements based on our audit.…Liability under the Securities Acts. Orange is a public entity whose shares are traded ona national exchange. A Public Company Accounting Oversight Board inspection revealed adeficiency in audits conducted by Orange’s auditor, LeGrow. LeGrow had failed to performimportant auditing procedures; after performing these procedures in response to the inspection, LeGrow identified several material misstatements and requested that Orange restateits financial statements. These restatements had the effect of reducing Orange’s reportedincome and cash flow from operations and increasing its liabilities.Upon the disclosure of these restatements, Orange’s stock price declined more than 40percent. Angered over this decline, investors are contemplating bringing legal action againstLeGrow for failing to detect the misstatements.Required:a. Assume that investors are bringing suit under the Securities Act of 1933. What wouldinvestors need to demonstrate to bring suit against LeGrow under this act?b. What…Classify each of the following issues according to whether they will be (1) included in written representations in all audits, (2) included in writtenrepresentations in audits of public entities (under PCAOB standards), or (3) not included in written representations:a. Management acknowledgment of its responsibility for the fairness of the financial statements in accordance with U.S. GAAP.b. A list of pending or threatened litigation, claims, or assessments currently outstanding against the client.c. A description of recommendations that allow the client to improve the efficiency and effectiveness of its operations.d. Availability of all financial records and related data.e. Information related to the presentation and disclosure of items within the financial statements.f. Disclosure of all significant deficiencies and material weaknesses in internal control.g. Information concerning fraud involving management and employees who have significant roles in internal control.h. Auditors’…