Barbara and Bill Hoehn have engaged A. Local Accounting Firm to conduct an audit of the cash accounts of their diamond mining business. The mines are not publicly owned, so a full-fledged audit is neither necessary nor desired, but the Hoehn's are concerned with the possibility that embezzlement has been going on in the area and they also want a clear idea of the current cash on hand. Therefore, the primary focus of the agreed-upon procedures will be a reconciliation of all cash accounts.

Having completed the reconciliations, A. Local is satisfied that the cash on hand as of fiscal year end 2008 matches the amount from their internally generated financial statements.

A. Local's report on the engagement follows:

Discuss the deficiencies in this report and suggest the wording for a proper report.

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A. Local Accounting Firm To whom it may concern: In order to establish the amount of cash on hand for the Hoehn Diamond Mines, we have recon- ciled all material cash accounts to the general ledger. Based on those reconciliations, we believe that the accounts are fairly stated. Sid Dithers, CPA