Apollo Shoes Case Study

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OVERVIEW Apollo Shoes Inc. is a medium-sized corporation. It has over 100 employees organized in five department including Marketing, Finance, Information Systems, Operations, and Legal Affairs. Apollo is a distributor of a technologically superior athletic product. Siren, Spotlight and Speakershoe are Apollo's premiere brands. Their products are shipped to large and small retailers across a six-state area. INDUSTRY This year was difficult for all businesses. Due to conflicts in foreign countries and uncertainty with the Federal Reserve’s adjustments of interest rates, consumer confidence has been greatly affected. Fewer consumers are buying Apollo Shoe's state-of-the-art athletic equipment. All of their operating divisions were severely tested and sales were not as strong as anticipated. PREDECESSOR AUDITOR Apollo Shoe’s management declined our request to communicate with the predecessor auditor. The prior auditors, Smith & Smith, CPAs, unexpectedly withdrew from their engagement with Apollo Shoes Inc, and a lawsuit was filed shortly thereafter. The authority to speak with the client’s predecessor auditor would have been a great source of reliable information concerning the client, and their refusal to allow communication is grounds for a heightened risk assessment. RISK ASSESSMENT Internal Control: The Apollo Shoe's management has not kept its business manual up to date. Several issues, such as classifying sales and authorization, have not been outlined in
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