Audit Report Apollo Shoes Essay example

1061 Words May 20th, 2013 5 Pages
Mr. Lancaster, The firm of Anderson, Olds, and Watershed is pleased to receive your notification to proceed with the audit and look forward to working with you. From the Audit Committee meeting minutes, we understand that Apollo Shoes requires help with the yearly audit because the former CPA firm withdrew unexpectedly (University of Phoenix, n.d.). Anderson, Olds, and Watershed will conduct the audit and “prepare the state franchise tax returns as well as the federal tax returns” (University of Phoenix, n.d., p. 9). Because of Apollo’s previous work with Smith and Smith, Anderson, Olds, and Watershed is “required by auditing standards to communicate with” Smith and Smith (Arens, Elder, & Beasley, 2012, p. 212). Ms. Wardlaw …show more content…
al, 2012, p. 214). Therefore, a material misstatement may not be detected during the audit. In addition, the audit may not detect errors under the materiality level, whether resulting from error, fraud, or misappropriation of assets. Anderson, Olds, and Watershed may decline to express an opinion or issue a report if the firm is unable to complete the audit for any reason.
To conduct the audit, the firm must acquire sufficient understanding of the internal control processes to help determine the nature and timing of the audit. However, the audit is not designed to identify deficiencies in internal control or provide assurance. The firm will make the audit committee aware of any significant deficiencies that come to Anderson, Olds, and Watershed’s attention during the audit.
As discussed with Ms. Ramirez, Anderson, Olds, and Watershed will rely on Apollo Shoes to prepare schedules and analyses of various accounts. Timely completion of these items will help the audit move more quickly.
Anderson, Olds, and Watershed rely on Apollo Shoes management for the financial statements. In addition, Apollo Shoes management is responsible for internal control over financial reports, ensuring the company complies with applicable laws and regulations, providing all financial records and other related financial information to the firm, and providing a representation letter at the conclusion of the audit confirming management’s

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