Beginning The Audit Report Essay

Thank you for choosing police squad D analyzeing for your analyze needs. This letter is to inform you on how we jut out to contract the canvass process for your compevery. We will be performing an canvass on the financial statements for Apollo Shoes for the year ended December 31, 2007 in articulate to get out reasonable federal agency that the statements are presented fairly and are presented in accordance with Gener bothy Accepted Accounting Principles (GAAP) (Arens, Elder, & Beasley, 2012). We will begin the scrutinizeed account by reviewing the statements as well as your organizational charts and the introductory fivesome years of federal income tax returns. After careful review of all documentation, we will review risks so that we can identify any authority risks and can draft the audit plan (Arens et al., 2012). We will then need to meet with management to determine the scope of the audit and answer any questions that management may have.After the meeting, we wi ll finalize the audit plan and begin our fieldwork. Our field time will be spent speech production with staff members and management, reviewing documentation such as policy and procedure manuals, knowledge about the wrinkle, and performing tests. We will be testing home(a) checks, ensuring the line of credit is in compliance with applicable financial regulations, and testing the materiality of the financial statements (Arens et al., 2012). We will be holding scheduled meetings with staff and management and try for that we will have full cooperation.We will try to interrupt the business as little as possible. Our fee schedule will be based upon the total time spent on each layer of the audit and we will be submitting invoices along the way. Our preliminary estimation of represent is $200,000 and we will notify you immediately of any changes that could exceed that estimation. Our formal fight letter,preliminary reservation checklist, and preliminary time frame estimate with audit milestones are included in the appendices for your review.ReferencesAmerican Institute of Certified humans Accountants. (2014). General scrutinise Engagement Checklist. Retrieved from http//www.aicpa.org/interestareas/peerreview/resources/peerreviewprogrammanual/2013/downloadabledocuments/20400-gen-audit-check-interimguidance.pdf Arens, A. A., Elder, R. J., & Beasley, M. S. (2012). Auditing and assurance services An integrated progress (14th ed.). New York, NY Perason/Prentice Hall. Becker Professional Education/CPA Review (2014) Audit Reports Devry/Becker Educational Development Corp. Boynton, W. C. (2006). Modern Auditing (8th ed.). Danvers, MA John Wiley & Sons, Inc. Louwers, T. R. (2007). Apollo Shoes, InC. Auditing and Assurance Services. McGraw-Hill Companies, Inc. familiar Company Accounting Oversight Board. (2014). Auditing Standard No. 16. Retrieved from http//pcaobus.org/Standards/Auditing/Pages/Auditing_Standard_16_Appendix_C.aspx Raspante, J. F. & Vono, S. (20 14). Engagement earn for the individual tax practitioner. Journal of Accountancy, retrieved from http//www. ledgerofaccountancy.com/Issues/2014/Jan/20137591.htmThis letter is to confirm the agreement and to handle the objectives for theaudit of Apollo Shoes, Inc. financial statements for the year ending December 31, 2007. We will be auditing the balance sheet, income statement, statement of retained earnings and cash flow. The financial statements and the enduringness of the internal control is responsibility of management (Becker CPA Review, 2014). I wishing to clarify that we have to have an understanding of the company and the internal control in order to provide an opinion. Although an audit should provide reasonable assurance about that the financial statement are free of material misstatement we cannot provide absolutely assurance due to inherent limitation in the internal control (Becker CPA Review, 2014).We request that the company can provide us with adequate evidence n ecessary to perform the audit. It is critical that we have advance to breeding and files including the minutes, besides to be able to inquire personnel and the reflexion of procedures as necessary. We have the responsibility that if a material weakness and or a significant deficiency are discovered in the execution of the audit, it should be communicated to the audit committee in writing (PCAOB, 2014). The management is in addition responsible to adjust the financial statements to correct material misstatements found during the audit if the correction are not done because they are immaterial, it should be express as part of the representation letter were management is confirming their responsibilities during the audit (PCAOB, 2014).Our out of pocket expenses and fees are estimating in $200,000, which covers the hours spent during the audit. If anything may call for this estimate we will let you know. Our fees are due when we complete the audit (Raspante & Vono, 2014). We are very enthusiastic to be your new auditors and we hope to adjoin your expectations. If you agree with this agreement, please sign in the space provided keep a copy for your records and return us the original signed. If you have any make headway questions, please do not hesitate to contact me.October 29, 2007 Received account procedures manual from Karina Ramirez for fieldwork (Louwers, 2007, p. 32). January 7, 2007 Prepare working papers for Board Minutes of great events and traffics during the past year. Make notes in the audit working papers of matters relevant for the auditor for the 2007 financial statements. Use the reference GA-3 with the spare-time activity headings and information in a table format Information Relevant to 2007 and Audit Auction Recommended (Louwers, 2007, p. 36). January 3, 2008 selection by audit committee of Anderson, Olds, & Watershed as auditors ratified (Louwers, 2007, p. 39). January 3, 2008 $750,000 fee was approved for the 2007 audit (p. 36) Jan uary 8, 2008 Received Apollos 2007 year-end trial balance, along with 2006 audited trial balance (p. 40). January 8, 2008 Create 3 spreadsheets for a 2 year comparative balance sheet, income statements, and statement of cash flows (p. 40). January 9, 2008 set preliminary analytical procedures on the financial statements.This includes calculating roughhewn-size financialstatements and long horse standard, and percent changesuse recent spreadsheet created for comparative statements calculate financial ratios with mutual stock at $24 million in current and prior periods Compare Apollos numbers with closest competitors, such as Nike and Rebook at EDGAR for industry averages write a brief memo highlighting say-so drop problem areas with calculations (p. 43). January 9, 2008 Write a brief memo (GA-4) highlighting what you reckon are potential problem areas. Include calculations to support (GA-4-1, GA-4-2, etc. (p. 43). January 9, 2008 Prepair a memo (GA-5) addressing materiality f or Apollo Shoes. The workpaper documents must be following GAAP. Address the following 1. Briefly describe indepdendent auditors concept of materiality 2. Describe some commone relationships and another(prenominal) considerations used by auditors when assessing the dollar amount considered matieral.What are some common measures of materiality with respect to income, sales, and toal assets? 3. Based on professional judgement, determine an amount you consider to be a minimum material misstatement for Apollo Shoes and vindicate your recommendation in your memo (p. 45). January 10, 2008 Write a memo (GA-6) addressing the potential for fraud for Apollo shoes. This should include SAS 99 fraud guidance addressing the following 1. ache you noticed any red flags in either the minutes or analytical procedures so far? 2. Address fraud risk in general terms types of risk (improper revenue recognition), significance of risk, likelihood of risk, pervasiveness or risk centralized to one functio n of or individual or is it throughout the organization?3. How might fraud be perpetrated or secret in the entity 4. Suggest ways we might alter our audit speak to to address the potential for fraud, such as assignment of personnel, predictability of auditing procedures, and examination of journal entries and other adjustments Continued for memowhat well need to get together with the broad(a) audit team for brainstorming session next week. January 10, 2008 AOW was informed of the Apollos mid-year computer installation. How will the computer processing, for the last two quarters transaction affect our audit this year? How will we use our new laptops for the Apollo engagement? For example, correspondence, memos, auditing working papers, prepared and maintained on the new laptops (p. 46).