The auditors' report below was drafted by a staff accountant of Baker and Baker, CPAs, at the completion of the audit of the comparative financial statements of Ocean Shore Partnership for the years ended December 31, 19X1 and 19X0. Ocean Shore prepares its financial statements on the income tax basis of accounting. The report was submitted to the engagement partner, who reviewed matters thoroughly and properly concluded that an unqualified opinion should be expressed.

{Auditor's Report}

We have audited the accompanying statements of assets, liabilities, and capital-income tax basis of Ocean Shore Partnership as of December 31, 19X1 and 19X0, and the related statements of revenue and expenses-income tax basis and changes in partners' capital accounts-income tax basis for the years then ended.

We conducted our audits in accordance with standards established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used as well as evaluating the overall financial statement presentation.

As described in Note A, these financial statements were prepared on the basis of accounting the Partnership uses for income tax purposes. Accordingly, these financial statements are not designed for those who do not have access to the Partnership's tax returns.

In our opinion, the financial statements referred to above present fairly, in all material respects, the assets, liabilities, and capital of Ocean Shore Partnership as of December 31, 19X1 and 19X0, and its revenue and expenses and changes in partners' capital accounts for the years then ended, in conformity with generally accepted accounting principles applied on a consistent basis.

Baker and Baker, CPAs April 3, 19X2

{Required:

Identify the deficiencies contained in the auditors' report as drafted by the staff accountant. Group the deficiencies by paragraph, where applicable. Do not redraft the report.