Question

The auditors’ report that follows was drafted by a staff accountant of Williams & Co., CPAs, at the completion of the audit of the financial statements of Lenz Corporation (nonpublic company) for the year ended December 31, 20X1. Assume that there is substantial doubt about the entity’s ability to continue as a going concern, and that this doubt is properly disclosed in the financial statements.

Independent Auditors’ Report
To the Board of Directors and Stockholders of Lenz Corporation:
We have audited the accompanying consolidated financial statements of Lenz Corporation and its subsidiaries, and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are in conformity with accounting principles generally accepted in the United States of America.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
Emphasis-of-Matter
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has suffered negative cash flows from operations and has an accumulated deficit that raises substantial doubt about the Company’s ability to continue as a going concern beyond a reasonable time. Management’s plans in regard to these matters are also described in
Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is modified with respect to this matter.
Opinion
In our opinion, except for the effects of the matter described in the preceding paragraph, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Lenz Corporation and its subsidiaries and the results of their operations and their cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America applied on a basis consistent with that of the preceding year.
Williams & Co., LLP
Phoenix Arizona
February 15, 20X2

Identify deviations from the appropriate nonpublic company audit report.



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  • CreatedOctober 27, 2014
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