Beginning the Audit Report (ACC 546)

Beginning the audit report
Name:
Course: ACC 546
Instructor:
Date:
Engagement letter
August 7, 2014
Mr. Larry Lancaster
Chairman, President
Apollo Shoes, Inc
Shoetown, ME
Subject: beginning the audit report
Dear Mr. Lancaster,
Audit objective and scope of audit in financial statements
This letter focuses on our previous understanding about the audit procedure for Apollo Shoes, Inc. The firm is pleased to inform you that we are available to carry out the audit of financial statements for the year ended 31 December 2013. Anderson, Olds, and Watershed, CPAs
would also like to point out and confirm the nature and objectives of this engagement. Our services will cover financial statements including the balance sheet, income statement, statement of cash flows and statement of retained earnings. It is also important to highlight that the firm will confirm whether the financial statements are presented and fairly prepared according to Generally Accepted Accounting Principles-GAAP (Rittenberg et al., 2012). Furthermore, the team members will focus on the internal controls put in place as effectiveness of operation activities in view of the need to perform assurance services.
Management responsibilities
The management is responsible for the preparation of financial statements, and the auditors will merely examine statements and express opinion. Even though, the partners know that the management ought to represent the financial statement and disclosure, where possible the auditor will help in preparation of financial statements. Essentially, this will also delve into providing counsel to the management on application of different accounting principles and adjustment to Apollo Shoe Inc’s financial statement. Nonetheless, the management will make the decision on the content of the financial statement. Additionally, the management is responsible for ensuring that that there is effective governance to reduce fraud risk and improve internal control (Leitch, 2012). The need to focus on the internal control system of the company is critical to the success of the audit process and ensures there is reasonable reliability on financial statements prepared.
Essentially, the internal control should focus on the policies adopted to ensure that there is proper maintenance of financial records. This is also meant to ensure that the transitions recorded reflect the proper state of financial affairs prepared according to the accepted standards (Leitch, 2012). Overall, the internal control system should provide assurance that there is no unauthorized acquisition of assets and there disposal is well documented in the financial statements. The reason behind this is that limitations in internal control make it harder to prevent misstatements
Auditor responsibility
We do not foresee a situation where we will be unable to complete the audit or form an opinion. To carry out the audi...