Beginning The Audit Report Essay

Thank you for taking Team D Auditing for your audit demands. This missive is to inform you on how we plan to get down the audit procedure for your company. We will be executing an audit on the fiscal statements for Apollo Shoes for the twelvemonth ended December 31. 2007 in order to supply sensible confidence that the statements are presented reasonably and are presented in conformity with Generally Accepted Accounting Principles ( GAAP ) ( Arens. Elder. & A ; Beasley. 2012 ) . We will get down the audit by reexamining the statements every bit good as your organisational charts and the anterior five old ages of federal income revenue enhancement returns. After careful reappraisal of all certification. we will reexamine hazards so that we can place any possible hazards and can outline the audit program ( Arens et al. . 2012 ) . We will so inquire to run into with direction to find the range of the audit and reply any inquiries that direction may hold.

After the meeting. we will finalise the audit program and get down our fieldwork. Our field clip will be spent talking with staff members and direction. reexamining certification such as policy and process manuals. larning about the concern. and executing trials. We will be proving internal controls. guaranting the concern is in conformity with applicable fiscal ordinances. and proving the materiality of the fiscal statements ( Arens et al. . 2012 ) . We will be keeping scheduled meetings with staff and direction and hope that we will hold full cooperation.

We will seek to disrupt the concern every bit small as possible. Our fee agenda will be based upon the entire clip spent on each phase of the audit and we will be subjecting bills along the manner. Our preliminary appraisal of cost is $ 200. 000 and we will advise you instantly of any alterations that could transcend that appraisal. Our formal battle missive. preliminary engagement checklist. and preliminary clip frame estimation with audit mileposts are included in the appendices for your reappraisal.

American Institute of Certified Public Accountants. ( 2014 ) . General Audit Engagement Checklist. Retrieved from hypertext transfer protocol: //www. aicpa. org/interestareas/peerreview/resources/peerreviewprogrammanual/2013/downloadabledocuments/20400-gen-audit-check-interimguidance. pdf Arens. A. A. . Elder. R. J. . & A ; Beasley. M. S. ( 2012 ) . Auditing and confidence services: An incorporate attack ( 14th ed. ) . New York. New york: 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 & A ; Sons. Inc. Louwers. T. R. ( 2007 ) . Apollo Shoes. InC. Auditing and Assurance Services. McGraw-Hill Companies. Inc. Public Company Accounting Oversight Board. ( 2014 ) . Auditing Standard No. 16. Retrieved from hypertext transfer protocol: //pcaobus. org/Standards/Auditing/Pages/Auditing_Standard_16_Appendix_C. aspx Raspante. J. F. & A ; Vono. S. ( 2014 ) . Engagement letters for the single revenue enhancement practician. Journal of Accountancy. retrieved from: hypertext transfer protocol: //www. journalofaccountancy. com/Issues/2014/Jan/20137591. htm

This missive is to corroborate the understanding and to discourse the aims for the audit of Apollo Shoes. Inc. fiscal statements for the twelvemonth stoping December 31. 2007. We will be scrutinizing the balance sheet. income statement. statement of maintained net incomes and hard currency flow. The fiscal statements and the effectivity of the internal control is duty of direction ( Becker CPA Review. 2014 ) . I want to clear up that we have to hold an apprehension of the company and the internal control in order to supply an sentiment. Although an audit should supply sensible confidence about that the fiscal statement are free of material misstatement we can non supply perfectly confidence due to built-in restriction in the internal control ( Becker CPA Review. 2014 ) .

We request that the company can supply us with equal grounds necessary to execute the audit. It is critical that we have entree to information and files including the proceedingss. besides to be able to ask forces and the observation of processs as necessary. We have the duty that if a stuff failing and or a important lack are discovered in the public presentation of the audit. it should be communicated to the audit commission in composing ( PCAOB. 2014 ) . The direction is besides responsible to set the fiscal statements to rectify material misstatements found during the audit ; if the rectification are non done because they are immaterial. it should be stated as portion of the representation missive were direction is corroborating their duties during the audit ( PCAOB. 2014 ) .

Our out of pocket disbursals and fees are gauging in $ 200. 000. which covers the hours spent during the audit. If anything may impact this estimation we will allow you cognize. Our fees are due when we complete the audit ( Raspante & A ; Vono. 2014 ) . We are really enthusiastic to be your new hearers and we hope to carry through your outlooks. If you agree with this understanding. delight mark in the infinite provided ; maintain a transcript for your records and return us the original signed. If you have any farther inquiries. delight make non waver to reach me.

October 29. 2007: Received accounting processs manual from Karina Ramirez for fieldwork ( Louwers. 2007. p. 32 ) . January 7. 2007: Prepare working documents for Board Minutes of of import events and minutess during the past twelvemonth. Make notes in the audit working documents of affairs relevant for the hearer for the 2007 fiscal statements. Use the mention ‘GA-3’ with the undermentioned headers and information in a table format: Information Relevant to 2007 and Audit Auction Recommended ( Louwers. 2007. p. 36 ) . January 3. 2008: choice by audit commission of Anderson. Olds. & A ; Watershed as hearers ratified ( Louwers. 2007. p. 39 ) . January 3. 2008: $ 750. 000 fee was approved for the 2007 audit ( p. 36 ) ; January 8. 2008: Received Apollo’s 2007 year-end test balance. along with 2006 audited test balance ( p. 40 ) . January 8. 2008: Make 3 spreadsheets for a 2 twelvemonth comparative balance sheet. income statements. and statement of hard currency flows ( p. 40 ) . January 9. 2008: Perform preliminary analytical processs on the fiscal statements.

This includes ciphering common-size fiscal statements and dollar sum. and per centum changes—use recent spreadsheet created for comparative statements ; cipher fiscal ratios with common stock at $ 24 million in current and anterior periods ; Compare Apollo’s Numberss with closest rivals. such as Nike and Rebook at EDGAR for industry norms ; compose a brief memo foregrounding possible job countries with computations ( p. 43 ) . January 9. 2008: Write a brief memo ( GA-4 ) foregrounding what you believe are possible job countries. Include computations to back up ( GA-4-1. GA-4-2. etc. ( p. 43 ) . January 9. 2008: Prepair a memo ( GA-5 ) turn toing materiality for Apollo Shoes. The workpaper paperss must be following GAAP. Address the followers: 1. Briefly describe indepdendent hearers construct of materiality ; 2. Describe some commone relationships and other considerations used by hearers when measuring the dollar sum considered matieral.

What are some common steps of materiality with regard to income. gross revenues. and toal assets? 3. Based on professional opinion. find an sum you consider to be a minimal stuff misstatement for Apollo Shoes and warrant your recommendation in your memo ( p. 45 ) . January 10. 2008: Write a memo ( GA-6 ) turn toing the potency for fraud for Apollo places. This should include SAS 99 fraud counsel turn toing the followers: 1. Have you noticed any ‘red flags’ in either the proceedingss or analytical processs so far? 2. Address fraud hazard in general footings: types of hazard ( improper gross acknowledgment ) . significance of hazard. likeliness of hazard. pervasiveness or hazard centralized to one map of or single or is it throughout the organisation?

3. How might fraud be perpetrated or concealed in the entity ; 4. Suggest ways we might change our audit attack to turn to the possible for fraud. such as assignment of forces. predictability of scrutinizing processs. and scrutiny of journal entries and other accommodations ; Continued for memo—what we’ll need to acquire together with the full audit squad for brainstorming session next hebdomad. January 10. 2008: AOW was informed of the Apollo’s mid-year computing machine installing. How will the computing machine processing. for the last two quarters’ dealing impact our audit this twelvemonth? How will we utilize our new laptops for the Apollo battle? For illustration. correspondence. memos. scrutinizing working documents. prepared and maintained on the new laptops ( p. 46 ) .