Beginning The Audit Report Essay

Thank you for choosing Team D Auditing for your canvas needs. This letter is to inform you on how we excogitate to begin the scrutinize process for your comp all. We testament be serveing an audit on the financial statements for Apollo fit out for the year ended December 31, 2007 in parliamentary procedure to provide reasonable assurance that the statements argon presented reasonably and are presented in accordance with Generally Accepted Accounting Principles (GAAP) (Arens, Elder, & Beasley, 2012). We entrust begin the audit by reviewing the statements as well as your organizational charts and the prior five years of federal income tax returns. later on careful review of all living, we will review encounters so that we can identify any capableness risks and can draft the audit plan (Arens et al., 2012). We will then ask to meet with perplexity to settle down the scope of the audit and answer any questions that oversight may have.After the meeting, we will finalize the audit plan and begin our fieldwork. Our field time will be spent speaking with staff members and management, reviewing documentation such as policy and procedure manuals, learning about the business, and performing tests. We will be interrogation internal fudges, ensuring the business is in compliance with applicable financial regulations, and testing the corporeality of the financial statements (Arens et al., 2012). We will be holding scheduled meetings with staff and management and hope 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 stage of the audit and we will be submitting invoices along the way. Our preliminary estimation of cost is $200,000 and we will nonify you immediately of any changes that could exceed that estimation. Our stiff engagement letter,preliminary engagement checklist, and preliminary time frame direct with audit milestones are include in t he appendices for your review.ReferencesAmerican Institute of Certified Public Accountants. (2014). General Audit 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 operate An integrated attempt (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. Public Company Accounting Oversight Board. (2014). Auditing meter No. 16. Retrieved from http//pcaobus.org/Standards/Auditing/Pages/Auditing_Standard_16_Appendix_C.aspx Raspante, J. F. & Vono, S. (2014). Engagement letters for the individual tax pr actitioner. Journal of Accountancy, retrieved from http//www.journalofaccountancy.com/Issues/2014/Jan/20137591.htmThis letter is to confirm the agreement and to discourse the objectives for theaudit of Apollo Shoes, Inc. financial statements for the year ending December 31, 2007. We will be auditing the correspondence sheet, income statement, statement of well-kept earnings and cash flow. The financial statements and the effectiveness of the internal control is responsibility of management (Becker CPA Review, 2014). I want 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 alleviate 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 necessary to perform the audit. It is critical that we have access to information and files including the minutes, besides to be able to inquire personnel and the contemplation of procedures as necessary. We have the responsibility that if a material weakness and or a significant need are discovered in the performance of the audit, it should be communicated to the audit committee in writing (PCAOB, 2014). The management is also 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 stated 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 affect 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 bracing hearers and we hope to fulfill 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 further questions, please do not hesitate to contact me.October 29, 2007 Received accounting procedures manual from Karina Ramirez for fieldwork (Louwers, 2007, p. 32). January 7, 2007 Prepare working papers for Board transactions of important events and transactions 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 following headings and information in a table format development Relevant to 2007 and Audit Auction Recommended (Louwers, 2007, p. 36). January 3, 2008 selection by audit committee of Anderson, Olds, & Watershed as auditors validate (Louwers, 2007, p. 39). January 3, 2008 $750,000 fee was approved for the 2007 audit (p. 36) January 8, 2008 Received Apollos 2007 year-en d 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 execute preliminary analytical procedures on the financial statements.This includes calculating super acid-size financialstatements and dollar amount, and percent changesuse young spreadsheet created for comparative statements calculate financial ratios with common stock at $24 million in modern and prior periods Compare Apollos numbers with closest competitors, such as Nike and Rebook at EDGAR for industry averages put out a brief memorandumrandum highlighting potential problem areas with calculations (p. 43). January 9, 2008 Write a brief memo (GA-4) highlighting what you believe 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 for 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 other 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 justify your recommendation in your memo (p. 45). January 10, 2008 Write a memo (GA-6) addressing the potential for drool for Apollo shoes. This should include SAS 99 skulker guidance addressing the following 1. Have 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 function of or individual or is it throughout the org anization?3. How might fraud be perpetrated or concealed in the entity 4. Suggest ways we might alter our audit approach 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 entire audit team for brainstorming session next week. January 10, 2008 AOW was inform 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).