Independent Auditor's Report We have audited the consolidated financial statements of Concord, Inc., and subsidiaries as of September 30, 2019, and the related consolidated statements of income, changes in stockholder's equity 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 audits. We did not audit the financial statements of Biotherm, Inc., a wholly-owned subsidiary, which statements reflect total assets and revenues constituting 22% and 20% respectively at September 30, 2019 of the consolidated totals. Those statements were audited by Ball & Brown, CPAs, whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for Biotherm, Inc. is based solely on their report. We conducted our audit in accordance with generally accepted auditing standards. 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, as well as assessing control risk. We believe our audits provide a reasonable basis for our opinion. In our opinion, based on our audit and the report of the other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Concord Inc., as of September 30, 2019 in conformity with generally accepted accounting principles, except for the uncertainty, which is discussed in Note 12 to the consolidated financials. The accompanying consolidated financial statements have been prepared assuming that the Company will continue in existence for a reasonable period of time. As discussed in Note 14 to the consolidated financial statements, the Company suffered a net loss and is currently in default under substantially all of its debt agreements. Management's plans in regard to these matters are also described in Note 14. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Smith & Jones, CPAs November 4, 2019. Required: The following items present some of the deficiencies in the drafted audit report noted by Smith. For each deficiency, indicate whether: S. Smith's review note is correct M. Mary's draft is correct B. Both Smith's review note and Mary's draft are incorrect Smith's Review Notes 1. An explanatory paragraph is required between the scope and opinion paragraphs for the change in accounting principles referring the reader to Note 10. 2. The names of the other auditors do not need to be explicitly stated in the introductory paragraph. Only that "other auditors" performed the audit and provided their report. 3. The opinion paragraph should extend the auditor's opinion beyond financial position to include the results of Concord's operations and flows. 4. The reference to the uncertainty in the opinion paragraph is incomplete. It should describe the nature of the uncertainty as pertaining to the grand jury investigation into possible violations of federal antitrust laws. 5. The explanatory paragraph following the opinion paragraph does not include the terms "substantial doubt" and "going concern". These terms are required to be used in this paragraph. The explanatory paragraph following the opinion paragraph includes an inappropriate statement that "the consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty." This statement is misleading and should be omitted.
Independent Auditor's Report
We have audited the consolidated financial statements of Concord, Inc., and subsidiaries as of September 30, 2019,
and the related consolidated statements of income, changes in
and 20% respectively at September 30, 2019 of the consolidated totals. Those statements were audited by Ball &
Brown, CPAs, whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts
included for Biotherm, Inc. is based solely on their report.
We conducted our audit in accordance with generally accepted auditing standards. 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, as well as
assessing control risk. We believe our audits provide a reasonable basis for our opinion.
In our opinion, based on our audit and the report of the other auditors, the consolidated financial statements
referred to above present fairly, in all material respects, the financial position of Concord Inc., as of September 30,
2019 in conformity with generally accepted accounting principles, except for the uncertainty, which is discussed in
Note 12 to the consolidated financials.
The accompanying consolidated financial statements have been prepared assuming that the Company will
continue in existence for a reasonable period of time. As discussed in Note 14 to the consolidated financial
statements, the Company suffered a net loss and is currently in default under substantially all of its debt
agreements. Management's plans in regard to these matters are also described in Note 14. The consolidated
financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Smith & Jones, CPAs November 4, 2019.
Required:
The following items present some of the deficiencies in the drafted audit report noted by Smith. For each
deficiency, indicate whether:
S. Smith's review note is correct
M. Mary's draft is correct
B. Both Smith's review note and Mary's draft are incorrect
Smith's Review Notes
1. An explanatory paragraph is required between the scope and opinion paragraphs for the change in accounting
principles referring the reader to Note 10.
2. The names of the other auditors do not need to be explicitly stated in the introductory paragraph. Only that
"other auditors" performed the audit and provided their report.
3. The opinion paragraph should extend the auditor's opinion beyond financial position to include the results of Concord's operations and flows.
4. The reference to the uncertainty in the opinion paragraph is incomplete. It should describe the nature of the
uncertainty as pertaining to the grand jury investigation into possible violations of federal antitrust laws.
5. The explanatory paragraph following the opinion paragraph does not include the terms "substantial doubt" and
"going concern". These terms are required to be used in this paragraph.
The explanatory paragraph following the opinion paragraph includes an inappropriate statement that "the
consolidated financial statements do not include any adjustments that might result from the outcome of this
uncertainty." This statement is misleading and should be omitted.
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