Following are the financial statements of the Anchor Manufacturing Corporation and the auditor's report for the year ended January 31, 19X4. The audit was conducted by James Haas, an individual practitioner, who has audited the corporation's financial statements and reported on them for many years. List and discuss the deficiencies of the auditor's report prepared by James Haas. Your discussion should include justifications that the matters you cited are deficiencies. (Do not check the addition of the statements. Assume that the addition is correct.)

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Anchor Manufacturing Corporation Statements of Condition January 31, 19X4 and 19X3 19X4 19X3 Assets Current assets: Cash $ 43,822 $ 51,862 Accounts receivable-pledged-less allowances for doubtful accounts of $3,800 in 19X4 and $3,000 in 19X3 (see note) in excess of replacement cost Other current assets Total current assets Fixed assets: Inventories, pledged-at average cost, not 65,298 46,922 148,910 118,264 6,280 5,192 264,310 222,240 Land-at cost 38,900 62,300 Buildings-at cost, less accumulated depreciation of $50,800 in 19X4 and $53,400 in 19X3 174,400 150,200 Machinery and equipment-at cost, less accumulated depreciation of $30,500 in 19X4 and $25,640 in 19X3 98,450 78,560 Total fixed assets 311,840 291,060 Total assets $576,150 $513,300