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Report on Apollo Shoes Inc Auditing

Categories Auditing, Company, Finance

Report, Pages 3 (713 words)



Report, Pages 3 (713 words)

Anderson, Olds, and Watershed (AOW) has completed the audit of the financial statements for the year ended December 31, 2007 for Apollo Shoes, Inc. The financial statements include the balance sheet, the income statement, the statement of retained earnings, and the statement of cash flows. The audit has been performed in accordance with generally accepted auditing principles in the United States. AOW has also reviewed Management’s Report on Internal Control Over Financial Reporting and have concluded that Apollo Shoes, Inc. has effective controls in place for financial reporting.

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The criteria for internal controls has been established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). “The COSO internal components include the following: 1) Control Environment, 2) Risk Assessment, 3) Control Activities, 4) Information and Communication 5) Monitoring” (Arens, Elder, & Beasley, 2007, p. 294). AOW has followed the criteria set forth by COSO and also by generally accepted auditing principles for the purpose of expressing an opinion about the financial statements and internal controls for financial reporting.

The management of Apollo Shoes, Inc. is responsible for the financial documents and for implementing and maintaining effective internal controls. AOW has a responsibility to express an opinion regarding the fairness of the financial statements and the effectiveness of the internal control over financial reporting. AOW did not conduct an audit on the financial statements of Apollo Shoes, Inc for the year ended December 31, 2006. This audit was conducted by another company. They have provided us with the audit for the year ended December 31, 2006.

The audit was used for comparative amounts.

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AOW performs audits in accordance with generally accepted audit principles. The process of the audit includes planning and performing the audit with the goal of obtaining a reasonable assurance that the financial statements are free of material misstatements. The audit will verify the effectiveness of Management’s internal controls in preventing any material misstatements. AOW feels that the audit performed provides a reasonable basis for the opinion issued.

Internal controls are designed and implemented by the company as a procedure for providing a reasonable assurance that the reliability of the financial reporting and the preparation of the financial statements are in accordance with Generally Accepted Accounting Principles (GAAP). Internal controls are used to ensure that the information reported is correct and demonstrates with accuracy that the company exhibits the transactions and the financial disposition of the company.

Internal controls are also used to ensure that the preparation of the financial statements follow GAAP and contain all the necessary information to accurately prepare the financial documents. Internal controls are also implemented as a measure to ensure that any detection of fraud or misstatement may be addressed and/or corrected to provide a reasonable assurance that the misstatements are not recorded in the financial statements. Internal controls have some limitations.

Because of these limitations, not all misstatements may be detected. Any assessment of internal controls as to their effectiveness or adequacy against future threats may prove to be a weakness because of the constantly changing demands on internal controls and the need for updating and improving the controls. The Company has not recognized sufficient provision against it outstanding receivables; in our opinion, at least $13. 2 Million should be provided to conform with U. S.

generally accepted accounting principles. If these provisions were provided, receivables would be reduced by $13. 2 Million, profits by 13. 2 Million, and retained earnings by same amount as of December 31, 2007. It is the opinion of AOW, except for the insufficient recognition of the receivables, that the financial statements are presented fairly in all material respects and properly depicts the financial standing of Apollo Shoes, Inc. as of December 31, 2007. The financial statements are consistent with GAAP.

AOW believes that the internal controls are also consistent with COSO and have been maintained effectively for the purpose of accurate and proper financial reporting for the year ended December 31, 2007. With the loss of Apollo Shoes, Inc. ’s largest customer, ongoing litigation issues, and the loss of working capital, there is doubt that the company will continue as a going concern. Management’s plan in addressing these issues is notated in the financial statements that have been prepared. AOW has not made any adjustments to the financial documents.

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Report on Apollo Shoes Inc Auditing. (2020, Jun 01). Retrieved from https://studymoose.com/report-on-apollo-shoes-inc-auditing-essay

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