Question

EPM, Inc., is a publicly listed manufacturing company with a calendar year-end. Their financial statements include a balance sheet a statement of income, statement of cash flows, and statement of stockholders equity. For the most recent audit, Harrington and Perry, LLP from Denver, Colorado, audited the 2018 and 2017 financial statements. The auditors completed all significant heldwork on March 5, 2020 and issued the audit report on March 16, 2020 Required: Consider all the facts given and write the PCA new standard unmodined opinion audit report

Answer 1

The Public Company Accounting Oversight Board has adopted a new auditing standard to enhance the relevance and usefulness of the auditor's report by providing additional and important information to investors.

The PCAOB adopted a new auditing standard, AS 3101, The Auditor's Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion to enhance the relevance and usefulness of the auditor's report by providing additional and important information to investors and other financial statement users. The new standard and related amendments require auditors to include in the auditor's report a discussion of the critical audit matters which are matters that have been communicated to the audit committee, are related to accounts or disclosures that are material to the financial statements, and involved especially challenging, subjective, or complex auditor judgment. The Audit report is as follows.

16/3/2020

Harrington & Perry LLP, Denver   

Auditor's Report

INDEPENDENT AUDITOR’S REPORT

Opinion on the Financial statements for the year 2018 & 2019

We have audited the Financial statements of EPM, Inc. a publicly listed manufacturing company for the years 2018 & 2019 as on date March 5th 2020. The Financial statements include the Balance sheet, Cash flow statement, Statement of Income and statement of Stockholders Equity. In our opinion, the Financial statements present fairly, in all material aspects, the financial position of the company as on 31/12/2018 & 31/12/2019 as per the Act and the accounting and auditing standards.

Basis for Opinion:

The Financial Statements are the responsibility of the management and our responsibility is to express the opinion on the financial statements prepared by the management. We are a public accounting firm registered with the PCAOB and are to be required to be independent with respect to the company and in accordance with the US federal securities laws and applicable rules and regulations.

We have conducted the audit in accordance to the standards of PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risk of material misstatement whether due to error or fraud and performing procedures that respond to those risks. Our audit also includes evaluating the accounting principles used and significant estimates used by the management.

Critical Audit matters:

The critical audit matters communicated below are matters arising from the current and the previous audit of the financial statements that we communicated to the audit committee and that relate to the accounts and disclosures that are material to the financial statements and involved our especially challenging subjective or complex disclosures / judgements. This communication does not alter in any way our opinion on the financial statements and we are not by communicating the critical audit matters below, provide separate opinion on audit matters or accounts or disclosures to which they relate.

[To Include Critical Audit matters of the Company]

Harrington & Perry LLP.

Denver

Signature

Date