Assume that you are a partner with the CPA firm of Katherine Williams & Associates LLP. The following report was drafted by your staff at the conclusion of an engagement to examine management's assertion about internal control over financial reporting of First National Bank, a large financial institution. Assume that management's report on internal control over financial reporting will be presented with your firm's report.

Required:

a. Assuming that the examination revealed no weaknesses in internal control over financial reporting that would be considered material, describe any misstatements or omissions contained in the draft report.

b. Assuming that the examination revealed a material weakness in internal control over financial reporting that was acknowledged in management's report, describe the modification that would be required in the report.

c. Assuming that the examination revealed a material weakness in internal control over financial reporting that was not acknowledged in management's report, describe the modification that would be required in the report.

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We have examined management's assertion that First National Bank maintained effective in- ternal control as of December 31, 20X2, included in the accompanying Management Report on Internal Control. Our examination was made in accordance with generally accepted auditing standards and, accordingly, included obtaining an understanding of internal control over financial reporting, testing, evaluating the design and operating effectiveness of internal control, and such other procedures as we considered necessary in the circumstances. In our opinion, management's assertion that First National Bank maintained effective in- ternal control as of December 31, 20X2, is fairly stated. Katherine Williams, & Associates LLP February 15, 20X3