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The following report was drafted on October 25, 2015, by Major,CPA, at the comple-
tion of an engagement to compile the financial statements of AjaxCompany for the fis-
cal year ended September 30, 2015. Ajax is a non-public entity inwhich Major’s child

has a material direct financial interest. Ajax decided to omitsubstantially all of the

disclosures required by generally accepted accounting principlesbecause the financial

statements will be for management’s use only. The statement ofcash flows was also

omitted because management does not believe it to be a usefulfinancial statement.

To the Board of Directors of Ajax Company:

I have compiled the accompanying financial statements of AjaxCompany as of

September 30, 2015, and for the year then ended. I planned andperformed the compila-
tion to obtain limited assurance about whether the financialstatements are free of material

misstatements.

Management is responsible for the preparation and fairpresentation of the financial

statements in accordance with accounting principles generallyaccepted in the United

States of America and for designing, implementing, andmaintaining internal control rel-
evant to the preparation and fair presentation of the financialstatements.

My responsibility is to conduct the compilation in accordancewith Statements on Stan-
dards for Accounting and Review Services issued by the AmericanInstitute of Certified

Public Accountants. It is substantially less in scope than anaudit in accordance with gen-
erally accepted auditing standards, the objective of which is theexpression of an opinion

regarding the financial statements taken as a whole. I have notaudited the accompanying

financial statements and, accordingly, do not express anyopinion on them.

Management has elected to omit substantially all of thedisclosures required by

accounting principles generally accepted in the United States ofAmerica. If the omit-
ted disclosures were included in the financial statements, theymight influence the user’s

conclusions about the company’s financial position, results ofoperations, and cash flows.

I am not independent with respect to Ajax Company. This lack ofindependence is due

to my daughter’s ownership of a material direct financialinterest in Ajax Company.

This report is intended solely for the information and use ofthe board of directors and

management of Ajax Company and should not be used for any otherpurpose.

Major, CPA

Required:

Identify the deficiencies contained in Major’s report on thecompiled financial state-
ments. Group the deficiencies by paragraph where applicable. Do notredraft the

report.

(AICPA, adapted)

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Bunny Greenfelder
Bunny GreenfelderLv2
28 Sep 2019

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17-41

Russ Major, CPA, drafted the following report on October 25,2015 at the completion of the engagement to compile the financialstatements of Ajax Company for the year ended September 30, 2015.Ajax is nonpublic organization in which Major's child has amaterial direct financial interest. Ajax decided to omitsubstantially all of the disclosures required by GAAP becasue thefinancial statements will be only for mangement's use. Thestatement of cash flows was also omitted because management doesnot believe it to be a useful financial statement.

Identify the deficiencies contained in Major's report on thecompiled financial statements. Group the deficiencies by paragraphwhen applicable. Do not redraft the report.

To the Board of Drictors of Ajax Company:

I have complied the accompanying financial statements ofAjax Company as of September 30, 2015, and for the year then ended.I planned and performed the compilation to obtain limited assuranceabout whether the financial statements are free of matrialmisstatements.

A compilation is limited to presenting information inthe form of financial statements. It is substantially less in scopethatn an audit in accordance with generally accepted auditingstandards, the objective of which is the expression of an opinionregarding the financial statements taken as a whole. I have notaudited the accompanying financial statements and, accordingly, donot express any opinion on them.

Management has elected to omit substantially all of thedisclosures required by generally accpeted accounting principles.If the omitted disclosures were included in the financialstatements, they might influence the user's conclusions about theCompany's financial position, results of operations, and changes infinancial position.

I am not independent with respect to Ajax Company. Thislack of of independence is due to my child's ownership of amaterial direct financial interest in Ajax Company.

This report is intended solely for the information anduse of the Board of Directors and management of Ajax Company andshould not be used for any other purpose.

I am trying to find NOT unqualified opinion. Some reports do not say "unqaulified." Does it mean that they are NOT UNQUALIFIED? Here is a report. If it is not unqualified, please explain me why it is not unqualified. In other words, it is qualified or adverse.

To the Board of Directors and Stockholders

Duonas Corp.

We have audited the accompanying balance sheets of Duonas Corp. as of June 30, 2017 and 2016, and the related statement of operations, changes in stockholders’ equity and cash flows for the years 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 audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits include consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits include examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our audits also include assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Duonas Corp. as of June 30, 2017 and 2016 and the related statement of operations, changes in stockholders’ equity and cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has had no revenues and earnings since inception. These conditions, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management's plans concerning these matters are also described in Note 2, which includes achieving profitable operations and raising additional funds. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ TAAD, LLP

Diamond Bar, CA

September 1, 2017

2–31. Simulation
Casa Royale, Inc., a nonpublic company, retained Ying and Company CPA to perform an
audit of the fi nancial statements for the current year. Howard Smythe, the partner in charge of
the audit, drafted the following unmodifi ed report:

To the Management of Casa Royale, Inc.:
We have examined the accompanying consolidated balance sheet of Casa Royale, Inc., and
its subsidiaries, as of December 31, 20X1, and the related consolidated statements of income,
retained earnings, and cash fl ows for the years then ended.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated
fi nancial statements in accordance with accounting principles generally accepted in the United
States of America; this includes the design, implementation, and maintenance of internal control
relevant to the preparation and fair presentation of consolidated fi nancial statements that are
free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these fi nancial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United
States of America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated fi nancial statements are free of material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the consolidated fi nancial statements. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material misstatement of the consolidated
fi nancial statements, whether due to fraud or illegal acts. In making those risk assessments, the
auditor considers internal control relevant to the entity’s preparation and fair presentation of
the consolidated fi nancial statements in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of signifi cant accounting estimates made by management,
as well as evaluating the overall presentation of the consolidated fi nancial statements.
We believe that the audit evidence we have obtained is adequate to provide a basis for our audit
opinion.
Opinion
In our opinion, the consolidated fi nancial statements referred to above present fairly, in all material
respects, the fi nancial position of Casa Royale, Inc., and its subsidiaries as of December 31,
20X1, and the results of their operations and their cash fl ows for the years then ended in accordance
with auditing standards generally accepted in the United States of America.
Howard Smythe , Partner
Phoenix, Arizona
February 12, 20X2
Reviewer’s Comments
Comment Is
Correct (yes or no)
a. The report should not be addressed to management.
b. The report should indicate that we have “audited,” rather than “examined,”
the fi nancial statements (fi rst paragraph after introduction).
c. The report should not indicate anything concerning management’s
responsibility for internal control.
d. The report should state that the auditors’ responsibility is to express
“reasonable assurance,” not an opinion (fi rst paragraph under “auditor’s”
responsibility).
e. The audit is designed to assess risks of material misstatements due to
errors or fraud; the term “illegal acts” is incorrect (second paragraph
under auditor’s responsibility).
f. The report should not refer to the auditors “evaluating the appropriateness
of accounting policies,” since those are the responsibility of management.
g. The evidence should be suffi cient and appropriate rather than “adequate”
(third paragraph under auditor’s responsibility).

Reviewer’s Comments
Comment Is
Correct (yes or no)
h. The opinion should not include “in all material respects” since the auditors
are providing an opinion on the accuracy of the fi nancial statements
(opinion paragraph).
i. The opinion should be on “accounting principles generally accepted in the
United States of America,” not on auditing standards (opinion paragraph).
j. The signature on the report should be that of the CPA fi rm, not that of
the partner.

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