You are engaged in the audit of the financial statements of Rapid, Inc. and the Slow Corporation, a recently acquired subsidiary. In acquiring Slow Corporation during 1999, Rapid, Inc. exchanged a large number of shares of its common stock for 90 percent of the outstanding common stock of Slow Corporation in a transaction accounted for as a pooling of interests. Rapid, Inc. is now preparing the annual report to shareholders and proposes to include in the report combined financial statements for the year ended December 31, 1999, with a footnote describing the pooling transaction. Rapid, Inc. also proposes to include in the 1999 report their prior year annual report (1998), including a five-year financial summary and your unqualified auditor's opinion.

Required:

1. Discuss the objectives or purposes of the standard of reporting that requires the auditor's report to identify circumstances in which generally accepted accounting principles have not been applied consistently over the past two periods.

2. Briefly discuss whether Rapid's proposed presentation of financial statements in the 1999 annual report would affect comparability.