Auditing and Assurance Services 9th Edition by Alvin Arens,Mark Beasley,Randy Elder

Exercise 18

For the year ended December 31, 2012, Friday Co., CPAs ("Friday"), audited the financial statements of Kim Company and expressed an unqualified opinion on the balance sheet only. Friday did not observe the taking of the physical inventory as of December 31, 2011, because that date was prior to its appointment as auditor. Friday was unable to satisfy itself regarding inventory by means of other auditing procedures, so it did not express an opinion on the other basic financial statements that year.
For the year ended December 31, 2013, Friday expressed an unqualified opinion on all the basic financial statements and satisfied itself as to the consistent application of generally accepted accounting principles.
The fieldwork was completed on March 12, 2014; the partner-in-charge reviewed the working papers and signed the auditor's report on March 19, 2014. The report on the comparative financial statements for 2013 and 2012 was delivered to Kim on March 21, 2014.
Required:
Prepare Friday's audit report that was submitted to Kim's board of directors on the 2013 and 2012 comparative financial statements. Kim is a public company. Friday has conducted an audit of Kim's internal controls over financial reporting based on the COSO framework. No material weaknesses were identified.