Page 497 - Auditing Standards

As of December 15, 2017

.22 An example of a report in which the opinion is qualified because of the use of an accounting principle
at variance with generally accepted accounting principles follows (assuming the effects are such that the

auditor has concluded that an adverse opinion is not appropriate):

Report of Independent Registered Public Accounting Firm

To the shareholders and the board of directors of X Company

Opinion on the Financial Statements

We have audited the accompanying balance sheets of X Company (the "Company") as of December
31, 20X2 and 20X1, the related statements of [titles of the financial statements, e.g., income,

comprehensive income, stockholders' equity, and cash flows] for each of the years then ended, and the
related notes [and schedules] (collectively referred to as the "financial statements"). In our opinion,
except for the effects of not capitalizing certain lease obligations as discussed in the following

paragraph, the financial statements referred to above present fairly, in all material respects, the financial
position of the Company as of December 31, 20X2 and 20X1, and the results of its operations and its
cash flows for the years then ended in conformity with accounting principles generally accepted in the
United States of America.

The Company has excluded, from property and debt in the accompanying balance sheets, certain lease
obligations that, in our opinion, should be capitalized in order to conform with accounting principles

generally accepted in the United States of America. If these lease obligations were capitalized, property
would be increased by $_______ and $_______, long-term debt by $_______ and $_______, and
retained earnings by $_______ and $_______ as of December 31, 20X2 and 20X1, respectively.

Additionally, net income would be increased (decreased) by $_______ and $_______ and earnings per
share would be increased (decreased) by $_______ and $_______, respectively, for the years then
ended.

Basis for Opinion

[Same basic elements as the Basis for Opinion section of the auditor's unqualified report in AS 3101]

Critical Audit Matters [if applicable]

[Include critical audit matters]

[Signature]

494