What are the purposes of additional information accompanying basic financial statements?

As a part of the audit of Ren Gold Manufacturing Company, a nonpublic company, management requests basic financial statements and separately, the same basic financial statements accompanied by additional information. Management
informs you that the intent is to use the basic financial statements for bankers, other creditors, and the two owners who are not involved in management. The basic financial statements accompanied by the additional information are to be used only by management.
Management requests the inclusion of specific information but asks that no audit work be done beyond what is needed for the basic financial statements. The following is requested:
1. A schedule of insurance in force.
2. The auditor’s feelings about the adequacy of the insurance coverage.
3. An aged trial balance of accounts receivable and evaluation of the adequacy of the
allowance for uncollectible accounts.
4. A summary of fixed asset additions.
5. Material weaknesses in internal control and recommendations to improve internal
control.
6. A 5-year summary of the most important company ratios, with the appropriate ratios to be determined at the auditor’s discretion.
7. A schedule of notes payable accompanied by interest rates, collateral, and a payment schedule.
a. What is the difference between basic financial statements and additional information?
b. What are the purposes of additional information accompanying basic financial
statements?
c. For the previously listed items (1 through 7), state which ones could appropriately be included as additional information. Give reasons for your answer.
d. Assume that an unmodified opinion is appropriate for the basic financial statements
report, that no testing was done beyond that required for the basic financial state-
ments report, and that only appropriate information is included in the additional in-
formation. Write the proper auditor’s report.

Last Completed Projects