Assume the same facts as in the preceding problem except that your junior staff auditors performed a review, instead of a compilation. The rough draft of the engagement report looks like this:

Discuss the deficiencies, omissions, and errors in this report. What other information would be necessary before signing the report?

Transcribed Image Text:

Audit Report We have reviewed the accompanying balance sheet of Greasemonkey's Delight as of December 31, 2007, and the related statements of income, retained earnings, and cash flows for the year then ended, in accordance with generally accepted auditing standards. A review is not as reliable for passing judgment on the financial statements as an audit is, but we have no reason to believe that the financial statements herein are stated unfairly. Accordingly, we express the opinion that, up to the point that a review can uncover any mis- statements, the financial statements are stated fairly and were prepared in accordance with generally accepted accounting principles consistently applied.