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give answer in 3 steps with explanation at the end of each step and final answer at the end:Your partner drafted the following report in the audit of a nonissuer yesterday. You need to describe the reporting deficiencies, explain the reasons for them, and discuss with the partner how the report should be corrected. You have decided to prepare a three-column worksheet showing the deficiencies, reasons, and corrections needed. Your partners report follows: I made my examination in accordance with auditing standards generally accepted in the United States of America. However, | am not independent with respect to Mavis Corporation because my wife owns 5 percent of the company’s outstanding common stock. The ‘accompanying balance sheet as of December 31, 2023, and the related statements of income, changes in shareholders’ equity, and cash flows for the year then ended were not audited by me. Accordingly, | do not express an opinion on them. Required: Indicate whether each of the following related to your partners report is correct or incorrect. The report should incude a tte containing the word independent” re Th reference to general accepted auding standards in the frst sentence is appropriate 1 Th report should disclose te reason for the lack of independence 1 Th report should reference the specic financial statements that may accompany th report | The last sentence should include te phrase “or any form of assurance” A

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give answer in 3 steps with explanation at the end of each step and final answer at the end:Uploaded ImageYour partner drafted the following report in the audit of a nonissuer yesterday. You need to describe the reporting deficiencies, explain the reasons for them, and discuss with the partner how the report should be corrected. You have decided to prepare a three-column worksheet showing the deficiencies, reasons, and corrections needed. Your partners report follows: I made my examination in accordance with auditing standards generally accepted in the United States of America. However, | am not independent with respect to Mavis Corporation because my wife owns 5 percent of the company’s outstanding common stock. The ‘accompanying balance sheet as of December 31, 2023, and the related statements of income, changes in shareholders’ equity, and cash flows for the year then ended were not audited by me. Accordingly, | do not express an opinion on them. Required: Indicate whether each of the following related to your partners report is correct or incorrect. The report should incude a tte containing the word independent” re Th reference to general accepted auding standards in the frst sentence is appropriate 1 Th report should disclose te reason for the lack of independence 1 Th report should reference the specic financial statements that may accompany th report | The last sentence should include te phrase “or any form of assurance” A

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Asked by: Test User 100183
Created at: 2025-05-07 00:05:44

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Let’s solve the question step by step, with explanations after each step. --- ### **Step 1: The report should include a title containing the word “independent”** **Explanation:** A report for a nonissuer (private company) must include a title that clearly states the auditor’s independence, such as “Independent Accountant’s Report.” Since the partner disclosed a lack of independence, including “independent” in the title would be misleading. **Correct or Incorrect:** **Incorrect** --- ### **Step 2: The reference to generally accepted auditing standards in the first sentence is appropriate** **Explanation:** If the auditor is not independent, the accountant **should not** state that the examination was conducted in accordance with generally accepted auditing standards (GAAS), as independence is a fundamental requirement of GAAS. **Correct or Incorrect:** **Incorrect** --- ### **Step 3: The report should disclose the reason for the lack of independence, reference specific financial statements, and include “any form of assurance”** - **Disclose the reason for lack of independence:** Accountants are **not required** to state the reason for the lack of independence; simply stating a lack of independence is sufficient. **Correct or Incorrect:** **Incorrect** - **Reference specific financial statements:** A report where the accountant is not independent **should not** reference specific financial statements since it might imply assurance. **Correct or Incorrect:** **Incorrect** - **Include “any form of assurance”:** The phrase “any form of assurance” is appropriate in the last sentence to clarify that no assurance is being provided. **Correct or Incorrect:** **Correct** --- ## **Final Answers Table** | Item | Correct or Incorrect | |---------------------------------------------------------------------|---------------------| | The report should include a title containing the word “independent” | Incorrect | | The reference to generally accepted auditing standards in the first sentence is appropriate | Incorrect | | The report should disclose the reason for the lack of independence | Incorrect | | The report should reference the specific financial statements that may accompany the report | Incorrect | | The last sentence should include the phrase “or any form of assurance” | Correct |

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