Bellamy is a private corporation and is presenting comparative financial statements.

• During 2016, Bellamy acquired Stockard Inc. and the effects of that transaction are reflected in the current year financial statements. Information about this transaction is disclosed in footnote 12.

• Patel was unable to perform normal accounts receivable confirmation procedures for accounts that are material, but not pervasive, to the financial statements. Unfortunately, Patel was not able to perform alternative procedures to support the existence of the receivables.

• Bellamy Corporation is the defendant in litigation where there is a reasonable possibility that Bellamy may be required to pay a substantial amount of cash, which might require the sale of certain fixed assets. Because management does not want to provide any information that the plaintiff might use against Bellamy, the case is not discussed in the financial statements.

• Bellamy issued debentures on January 31, 2015, in the amount of $10 million. The funds obtained from the issuance were used to finance the expansion of plant facilities. The debenture agreement restricts the payment of future cash dividends to earnings after December 31, 2020. Bellamy has disclosed this in the footnotes to the financial statements.

a. Identify and explain any items included in “Other Information” that need not be part of the auditor’s report.

b. Explain the deficiencies in Patel’s report as drafted.

Answer rating: 100% (QA)

a Some of the items included in Other information that need not be part of the auditors report inclu... View the full answer