Rotter & Co, Ltd, a CPA firm in Silver Bell, Arizona, has completed the audit of the financial17-36.statements of Exchecker Corporation as of, and for, the year ended December 31, 20X1. Findings2,related to the financial statements and the audit include:3,4comp:marginal textLO 17-2,3,4Exchecker is a public company that presents two years of balance sheets and three years ofthe other financial statements in accordance with SEC reporting requirements.Page 693During 20X1, Exchecker changed its method of accounting for long-term constructioncontracts and properly reflected the effect of the change. Rotter is satisfied with Exchecker'sjustification for making the change. The change is discussed in Note 12.Rotter was unable to perform normal accounts receivable confirmation procedures, butalternate procedures were used to satisfy Rotter as to the validity of the receivables.Exchecker Corporation is the defendant in litigation, the outcome of which is highlyuncertain. If the case is settled in favor of the plaintiff, Exchecker will be required to pay asubstantial amount of cash that might require the sale of certain assets. The litigation and thepossible effects have been properly disclosed in Note 11. Rotter wishes to include discussionof this matter in the audit report.Rotter gathered sufficient appropriate audit evidence as of February 10, 20X2, and planned areport release date of February 16, 20X2.Required: Required:Consider all facts given, and prepare an auditors' report in an