$(2)$ Based upon discussion in the case, prepare the auditor's report that King and Company rendered at the end of the year $2011$ engagement. How does this opinion differ from a standard auditor's report? $[$Case$1-2.$doc$]$

Case $1-$ Exercise $2$

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King and Company

PRO FORMA AUDITOR'S REPORT

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To the$$ Shareholders of

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We have audited the accompanying balance sheet of $[$insert company name here$]$ as of $[$insert balance sheet date here$],$ and the related statements of income, retained earnings, and cash flows for the year then ended.$$ These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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We conducted our audit in accordance with generally accepted auditing standards in the United States of America.$$ Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.$$ An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.$$ An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.$$ We believe that our audit provides a reasonable basis for our opinion.$$

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$[$if qualification, insert reasons here$]$

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$$ In our opinion, $[$insert qualification $($if any$)$ here$],$ the aforementioned financial statements present fairly, in all material respects, the financial position of the $[$insert company name here$]$ at $[$insert balance sheet date here$],$ and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles in the United States of America.

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$[$if explanatory paragraph needed, insert here$]$