Beginning the Audit Process

Beginning the apprizevass study Peter Serunjoji ACC546 January 15, 2012 Arlette Peoples Beginning the studyed account Report MEMORANDUM TO Larry Lancaster, Chairman, President, and CEO of Apollo Shoes, Inc. FROM ground substance Certified Public Accountants (MCPA) Inc. , DATE January 15 2012 SUBJECT Beginning the audited account Report ( participation letter, Engagement checklist, Outline of timeframes and milestones of the examine) Dear Mr. Lancaster, This letter is to confirm the understanding of the ar holdments for the objectives and terms of the upcoming take stocking procedure for Apollo Shoes, Inc.Our firm is pleased to slide by to execute with your compevery and perform the audit of the year ending on celestial latitude 31, 2011. Our PCA staff members would like to confirm the audit objectives, terms, limitations, and nature of the work reserved for this engagement. The highlight of our serve ordain cover auditing pecuniary teachings that let in the income m astery, balance sheets, statement of retained earnings, and the statement of cash flows. The monetary audits volition possess sure that financial statements atomic number 18 presented fit in to General Accepted Accounting Principles (GAAP).Since investors, creditors, managers, and judicature agencies use these statements, it is very important for the attendee to ensure every financial statements correct to GAAP (Arens, Elder, & Beasley, 2006). The audit team exit also examine and measure the operating(a) performance by studying detail parts of the organization and evaluate the forte and efficiency of operation activities on the financial statements. Our firm exit gladly depict reasonable, but not absolute, office table help of assists that be performed by professional auditors to elevate the credibility of nternal withstands, IT systems, financial statements, compliance with commandment and human resource practices. Our auditors will evince conclusion report s that will enhance the boldness of users, creditors, bankers, and steering. One of the assurance services brookd by our firm is attestation services. An attestation service is a type of assurance service in which the CPA firm issues a report ab place the reliability of an financial statement that is made by an some other c solelyer. witness services fall in to quaternity categories audit of historical financial statements, long suit of intrinsic run into over financial reporting, review of historical financial statements, and other attestation services that may be applied to a broad range of subject matter (Arens, Elder, & Beasley, 2006, p. 9). Our team will help to define somatic weaknesses in the internal controls that can occasionally bring to pass material misstatements in the financial statements. With the work through of our team, it is possible to determine whether deficiencies in the reports ar significant enough to be considered material weaknesses.The team w ill first work with the high-risk aras that require additional attention. These atomic number 18as are sales and sales allowances, accounts receivable, inventory, expenses, property and equipment purchases. We will report our horizon after we are done with all the tests. We will treat our opinion with you if the result is qualified opinion or if we contract any concerns with inveterate this engagement. Auditors will obtain documentary rise to support their testing for the internal control and the examination of all transactions to operate the sufficiency of the information.Our team will deprivation to gain an understanding of your control mental synthesis and perform assessments to determine any control risks. However, auditors are not responsible for providing assurance on internal control or identifying significant deficiencies. In addition, auditors are not responsible for detecting errors or frauds that are immaterial to the financial statements. Auditors can provide a detailed examination of all transactions that are performed under a high risk of material errors and can notify the audit committee if any significant deficiencies are deducted.Apollos caution is responsible to maintain effective internal control over financial reports and stool sure the confederacy complies with the laws and regulations. Our team demands that the focusing provide us with all financial accedes and related information. We will require that your management team provide us with a letter to confirm management function for the preparation of a financial statement in conformity with GAAP and provide all information necessary in a timely basis for our audit process.The timing of the auditing process and the schedules are listed infra for your review. The timely completion of this work will be at the end of our audit work. Our firms fees of the auditing process are to be estimated on a hateful of hourly rates. Our initial estimate of lend fees, $250,000. 00, will be billed as work progresses. In the case of unaccustomed circumstances, the fees may be adjusted to the refreshed expansion of the engagement. Unless terminated, amended or otherwise superseded, this letter remains effective for the time to come years.If your confederation agrees to the terms and conditions of this engagement, we would like to have a bun in the oven you to sign this letter and return it to us and keep a copy for your references. We esteem providing you with our services. Accepted Sincerely Acknowledged on behalf of Apollo shoes Company By ________________ stimulate and title Date ______________ Audit/Engagement Checklist Processes Yes No Initial Date decision making to accept the new guest, Apollo Find bring out why the client wants or needs an audit Make sure that the client understands the terms of the engagement to avoid misunderstandings Selecting the unavoidable audit specialists staff for the engag ement deciding on a time for a light uponing with the client to explain the objectives of the auditing process realize investigation about the play along to determine if there is any electric potential liability to work with them Specify the service that is provided by the firm to the company assignment the appropriate staff to the engagement to meet the Generally Accepted Auditing Standards The staff that are assigned to the engagement must have a good Understanding the clients patronage and industry Make a gabble to the clients facilities to gain more understanding of its transmission line Find out if there is a related party to the client which has a combined problem transactions Request for the official record of the meetings of the board of directors and stockholders Assess the risk that the business line can face in the prox Make analyses and examine all the ratios to compare the client to industry neaten all documents and paper work for all the stairs and procedures that was done by the auditing team Prepare final audit reports Outline of Timeframes and Milestones for the Audit Start Date Expected windup date Activity 1/17/2012 1/18/2012 Meeting with the company board and discus the engagement objectives 1/21/2012 1/23/2012 date the facility /25/2012 1/31/2012 Collecting information about the company structure including internal control 2/2/2012 02/08/2012 Requesting management report 02/10/2012 02/15/2012 Assess client business risk 02/17/2012 02/27/2012 Perform preliminary analytical procedures 02/29/2012 03/cxv/2012 Prepare audit reports The 90 old age time period may be adjusted to offset any delays beyond a contracting officers control. Some examples of these delays are delays in receiving the results of proficient evaluation and delays in receiving reports from DCAA Reference Arens, A. A. , Elder, R. J. , & Beasley, M. S. (2006). Auditi ng and bureau Services (11th Ed. ). Prentice Hall, Upper blame River, NJ Pearson Prestice Hall.