Beginning The Audit Report A

Topics: Auditing, Audit, Balance sheet Pages: 11 (2018 words) Published: December 28, 2014


Beginning the Audit Report
October 25, 2007
Mr. Joe Bootwell
Executive Senior Vice-President & CFO
Apollo Shoes, Inc
100 Shoe Plaza
Shoetown, Maine 00001
Dear Mr. Bootwell,
Thank you for choosing Team D Auditing for your audit needs. This letter is to inform you on how we plan to begin the audit process for your company. We will be performing an audit on the financial statements for Apollo Shoes for the year ended December 31, 2007 in order to provide reasonable assurance that the statements are presented fairly and are presented in accordance with Generally Accepted Accounting Principles (GAAP) (Arens, Elder, & Beasley, 2012). We will begin the audit by reviewing the statements as well as your organizational charts and the prior five years of federal income tax returns. After careful review of all documentation, we will review risks so that we can identify any potential risks and can draft the audit plan (Arens et al., 2012). We will then ask to meet with management to determine the scope of the audit and answer any questions that management may have. After the meeting, we will finalize the audit plan and begin our fieldwork. Our field time will be spent speaking with staff members and management, reviewing documentation such as policy and procedure manuals, learning about the business, and performing tests. We will be testing internal controls, ensuring the business is in compliance with applicable financial regulations, and testing the materiality of the financial statements (Arens et al., 2012). We will be holding scheduled meetings with staff and management and hope that we will have full cooperation. We will try to interrupt the business as little as possible. Our fee schedule will be based upon the total time spent on each stage of the audit and we will be submitting invoices along the way. Our preliminary estimation of cost is $200,000 and we will notify you immediately of any changes that could exceed that estimation. Our formal engagement letter, preliminary engagement checklist, and preliminary time frame estimate with audit milestones are included in the appendices for your review. Thank you! Sincerely,

Team D Auditing
111 Team D Way
Anywhere, ME 00001
References
American Institute of Certified Public Accountants. (2014). General Audit Engagement Checklist. Retrieved from http://www.aicpa.org/interestareas/peerreview/resources/peerreviewprogrammanual/2013/downloadabledocuments/20400-gen-audit-check-interimguidance.pdf Arens, A. A., Elder, R. J., & Beasley, M. S. (2012). Auditing and assurance services: An integrated approach (14th ed.). New York, NY: Perason/Prentice Hall. Becker Professional Education/CPA Review (2014) Audit Reports; Devry/Becker Educational Development Corp. Boynton, W. C. (2006). Modern Auditing (8th ed.). Danvers, MA: John Wiley & Sons, Inc. Louwers, T. R. (2007). Apollo Shoes, InC. Auditing and Assurance Services. McGraw-Hill Companies, Inc. Public Company Accounting Oversight Board. (2014). Auditing Standard No. 16. Retrieved from http://pcaobus.org/Standards/Auditing/Pages/Auditing_Standard_16_Appendix_C.aspx Raspante, J. F. & Vono, S. (2014). Engagement letters for the individual tax practitioner. Journal of Accountancy, retrieved from: http://www.journalofaccountancy.com/Issues/2014/Jan/20137591.htm

Appendix A
The Engagement Letter
October 25, 2007
Mr. Joe Bootwell
Executive Senior Vice-President & CFO
Apollo Shoes, Inc
100 Shoe Plaza
Shoetown, Maine 00001
Dear Mr. Bootwell:
This letter is to confirm the agreement and to discuss the objectives for the audit of Apollo Shoes, Inc. financial statements for the year ending December 31, 2007. We will be auditing the balance sheet, income statement, statement of retained earnings and cash flow. The financial statements and the effectiveness of the internal control is responsibility of management (Becker CPA Review, 2014). I want to clarify that we have to have an understanding of the...

References: Monitoring
Antifraud Programs and Controls" (Boynton, 2006, p
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