Engagement Letter Apollo Shoes‚ This letter is to confirm our understanding of the terms and objectives of our engagement and the nature of the services we will provide. We will audit the consolidated balance sheet of Apollo Shoes as of year end 2007‚ and the related consolidated statements of operations‚ retained earnings‚ and cash flows. The objective of our audit is the expression of an opinion about whether your consolidated financial statements are fairly presented‚ in all material
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While evaluating Apollo Shoes‚ there are some areas of concern that are potential fraudschemes. The fraud can lead to the entire collapse/demise of the company if not corrected.These will also affect the share value and investor confidence. An overview of the process of investigation along with recommendations for the company.As with any company‚ revenue recognition is an important part of operations of a ApolloShoes. As stated in GAAP standards‚ revenue generated must be realistic and recognizable
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Similar to what you did with the Revenue Cycle‚ I want you to prepare a bridge working paper for the audit of Apollo Shoes as of December 31‚ 2007‚ listing the major errors that could occur in the purchasing system and to describe the test of controls procedures for auditing related purchasing controls to determine whether reliable control exists. I don’t think that Apollo has enough purchase transactions that we need to rely on the controls (in other words‚ we’ll look at them all)‚ but we need
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The company’s total losses/expenses as management has estimated are $11 million. The total amount that the auditor might suggest would be about $18.6 million. This means that the materiality threshold is broken for materiality of misstatement of net income‚ even though as shown below‚ each entry itself does not break that threshold by itself. The deferred costs can be divided over the next 2 years. So this year’s entry would be as follows and there should be a disclosure note about the remaining
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considered evidence that the account is stated fairly. With the positive confirmations‚ we are trying to find information on account balances or specific invoices. We sent positive confirmations to Neutralizer‚ Mall-Wart‚ Run For Your Life Shoes‚ Paul Bunion Footwear‚ Sassy Shoes‚ and International Soccer Federation. We sent a negative confirmation to Tread. The ones that we sent a positive confirmation to‚ we were wondering about some discrepancies in the numbers and needed confirmation that payments were
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requests. a.i.1.a.i.1.b.i. Vouch cash receipts after the confirmation date for subsequent payment. a.i.1.a.i.1.b.ii. Vouch sales invoices and shipping documents. 4. Evaluate the adequacy of the allowance for doubtful accounts. a. Vouch a sample of current amounts in the aged trial balance to sales invoices to determine whether amounts aged current should be aged past due. b. Compare the current-year write-off experience to the prior-year allowance. c. Vouch cash receipts after the balance sheet
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A Review of the Cash Conversion Cycle At Lawrence Sports‚ the management of their cash conversion cycle‚ and working capital system‚ is critical to their continued success. It appears that a review of this process is needed in order to fully understand what they are currently doing‚ where they can improve‚ and how much of an impact those options will have on the company. According to Emery‚ et. al.‚ in their work Corporate Financial Management‚ “The cash conversion cycle is the length of time
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ICC-1 Apollo Shoes‚ Inc. Internal Control Questionnaire Sales Transaction Processing December 31‚ 2007 Objectives and Questions Yes‚ No‚ N/A Comments Environment: 1. Is the credit department independent of the sales department? Yes. Credit manager in Treasurer’s office 2. Are sales of the following types controlled by the same procedures described below? Sales to employees‚ COD sales‚ disposals of property‚ cash sales and scrap sales. No available information‚ apparently not applicable
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1. Introduction Increasingly‚ we are seeing many firms from various industries allowing their customers to pay on credit. This action will inevitably have a direct implication on the financial statements of these firms‚ in terms of accounts receivables‚ allowance for bad debt and uncollectible debt expense. This is especially so when customers are unable to repay their debts. In this paper‚ we will examine the 2008 financial statement of four companies in the retail industry‚ namely
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Notes on Apollo Shoes Audit Case Task #1 (Overview/Intro) Go to the “Weekly Materials” folder and locate the “Apollo Shoes Files” folder‚ between the week 1 and week 2 folders. Under this menu you will find a file entitled Apollo Shoes Case Study.doc. This file gives you all of the details and evidence that you will need for the case. We will only be completing specified sections of this case as discussed below. Review the table of contents in the case document (page 4.) This will tell you
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