Following are the financial statements of Young Manufacturing Company Ltd and the auditor's report for the year ended 30 June 20X0. The examination was conducted by John Smith, an individual practitioner, who has examined the company's financial statements and reported on them for many years.

To: Mr Paul Young, Managing Director...................................................31 August 20X0
Young Manufacturing Company Ltd
I have examined the balance sheet of Young Manufacturing Company Ltd and the related statements of income and retained earnings.
These statements present fairly the financial position and results of operations in conformity with generally accepted principles of accounting applied on a consistent basis. My examination was made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as I considered necessary in the circumstances.
(Signed) John Smith
REQUIRED
List and discuss the deficiencies of the auditor's report prepared by John Smith. Your discussion should include justifications that the matters you cited are deficiencies. (Don't check the addition of the statements-assume the addition is correct.)

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YOUNG MANUFACTURING COMPANY LTD Balance Sheet 30 June 20X0 and 20X9 Assets Current assets: 20X0 20X9 $43 822 $ 51 862 Cash Accounts receivable-less allowance for doubtful debts of $3800 in 20X0 and $3000 in 20X9 (see note) Inventories-at average cost, not in excess of replacement cost Other current assets 65 298 148 910 6 280 $264 310 46 922 118 264 5 192 $222 240 Total current assets Non-current assets $38 900 $62 300 Land-at cost Buildings-at cost, less accumulated depreciation of $50 800 in 20X0 and $53 400 in 20X9 174 400 150 200 Machinery and equipment-at cost, less accumulated depreciation of $30 500 in 20X0 and $25 640 in 20X9 Total non-current assets 98 540 $311 840 $576 150 78 560 $291 060 $513 300 Total assets Liabilities and shareholders' equity Current liabilities Accounts payable Other liabilities Current portion of long-term mortgage payable Income taxes payable 27 926 68 743 3600 46 840 $147 109 $ 48 161 64 513 3600 30 866 $147 140 Total current liabilities Non-current liabilities Mortgage payable 90 400 94 000 $237 509 $241140 Total liabilities Shareholders' equity: Paid-up capital Retained profits $100 000 238 641 $338 641 $576 150 $100 000 172 160 $272 160 $513 300 Total shareholders' equity Total liabilities and shareholders' equity YOUNG MANUFACTURING COMPANY LTD Income Statements for the years ended 30 June 20X0 and 20X9 ncome 20X0 20X9 Sales Other income $884 932 3 872 $888 804 $682 131 2 851 $684 982 Total Costs and expenses: Costs of goods sold Selling expenses Administrative expenses Provision for income taxes Other expenses $463 570 241 698 72 154 45 876 12 582 $835 880 52 924 $353 842 201 986 66 582 19 940 13 649 $655 999 28 983 Total Net income