Beginning the Audit Process

jump the analyseed account Report Peter Serunjoji ACC546 January 15, 2012 Arlette Peoples Beginning the Audit Report record TO Larry Lancaster, Chairman, President, and CEO of Apollo Shoes, Inc. FROM Matrix Certified Public Accountants (MCPA) Inc. , DATE January 15 2012 field of force Beginning the Audit Report (Engagement earn, Engagement checklist, Outline of mframes and milestones of the audit) Dear Mr. Lancaster, This letter is to confirm the understanding of the arrangements for the objectives and terms of the upcoming auditing procedure for Apollo Shoes, Inc.Our firm is joyous to continue to work with your company and get along the audit of the year destination on December 31, 2011. Our PCA module members would like to confirm the audit objectives, terms, limitations, and personality of the services raised for this engagement. The highlight of our services testamenting c everyplace auditing fiscal statements that accommodate the income statement, balance sheets, statement of retained earnings, and the statement of cash flows. The financial audits leave make sure that financial statements ar presented according to General current Accounting Principles (GAAP).Since investors, creditors, managers, and government agencies use these statements, it is very important for the auditor to chequer tout ensemble financial statements conform to GAAP (Arens, Elder, & Beasley, 2006). The audit police squad impart also examine and measure the carrying into actional performance by perusal specific parts of the organization and evaluate the effectiveness and efficiency of operation activities on the financial statements. Our firm will gladly provide reasonable, just now not absolute, boldness services that are performed by professional auditors to call down the credibility of nternal controls, IT systems, financial statements, compliance with regulation and human resource practices. Our auditors will express conclusion reports that will enhance the confidence of users, creditors, bankers, and steering. One of the boldness services provided by our firm is attestation services. An attestation service is a type of assurance service in which the CPA firm issues a report ab egress the re obligation of an assertion that is made by another(prenominal) party.Attestation services fall in to four categories audit of historic financial statements, effectiveness of interior control over financial reporting, surveil 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 police squad up will help to define corporeal weaknesses in the home(a) controls that potty occasionally create material misstatements in the financial statements. With the experience of our team, it is practicable to determine whether deficiencies in the reports are signifi fuckt enough to be considered material weaknesses.The team will first work wi th the high-risk areas that require additional attention. These areas are sales and sales allowances, accounts receivable, inventory, expenses, property and equipment purchases. We will report our whim after we are done with all the tests. We will discuss our ruling with you if the result is qualified opinion or if we have any concerns with continuing this engagement. Auditors will obtain documentary evidence to support their testing for the internal control and the examination of all transactions to verify the sufficiency of the information.Our team will need to gain an understanding of your control structure 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 focal point is responsible to maintain effective internal control over financial reports and make sure the company complies with the laws and regulations. Our team demands that the management provide us with all financial records and related information. We will require that your management team provide us with a letter to confirm management responsibility for the preparation of a financial statement in consistency 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 on a lower floor for your review. The timely completion of this work will be at the expiry of our audit work. Our firms fees of the auditing process are to be estimated on a base of hourly rates. Our initial estimate of total fees, $250,000. 00, will be billed as work progresses. In the case of whimsical circumstances, the fees may be adjusted to the radical expansion of the engagement. Unless terminated, amended or otherwise superseded, this letter remains effective for the future years.If your company agrees to the terms and conditions of this engagement, we would like to ask you to sign this letter and return it to us and corroborate a copy for your references. We appreciate providing you with our services. Accepted Sincerely Acknowledged on behalf of Apollo shoes Company By ________________ Name and title go steady ______________ Audit/Engagement Checklist Processes Yes No Initial Date Deciding to accept the new lymph node, Apollo Find out why the client wants or needs an audit guess sure that the client understands the terms of the engagement to avoid misunderstandings Selecting the required audit specialists staff for the engagement Deciding on a time for a meeting with the client to explain the ob jectives of the auditing process answer investigating about the company to determine if there is any potential liability to work with them Specify the service that is provided by the firm to the company assign the appropriate staff to the engagement to meet the Generally Accepted Auditing Standards The staff that are assigned to the engagement must have a favorable Understanding the clients business and industry Make a visit to the clients facilities to gain more understanding of its business Find out if there is a related party to the client which has a have business transactions Request for the official record of the meetings of the board of directors and stockholders respect the risk that the business can face in the future Make analyses and compare all the ratios to compare the client to industry Prepare all documents and paper work for all the steps and procedures that was done by the auditing team Prepare final audit reports Outline of Timeframes and Milestones for the Audit Start Date Expected Completion date Activity 1/17/2012 1/18/2012 Meeting with the company board and discus the engagement objectives 1/21/2012 1/23/2012 Visit 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 03/115/2012 Prepare audit reports The 90 days time period may be adjusted to head start any delays beyond a contracting officers control. round examples of these delays are delays in receiving the results of technical evaluation and delays in receiving reports from DCAA Reference Arens, A. A. , Elder, R. J. , & Beasley, M. S. (2006). Auditing and agency Services (11th Ed. ). Prentice Hall, Upper Saddle River, NJ Pearson Prestice Hall.