Beginning_the_Audit_–_Apollo_Shoes

Beginning the Audit – Apollo Shoes Anderson, Olds & Watershed, CPAs, LLC Phoenix, AZ 85210 October 15, 2012 Mr. Larry Lancaster Chairman, President & CEO Apollo Shoes 1 Shoeplace Shoetown, Maine 00001 Dear Mr. Lancaster, The Objective and Scope of the Audit of the Financial Statements You have requested that we audit the financial statements of Apollo Shoes Incorporated, which comprise the balance sheet as of December 31, 2012, and the related statements of operations, changes in equity and cash flows for the year end, and the related notes to the financial statements. We are please to confirm our acceptance and our understanding of this audit engagement by means of this letter. Our audit will be conducted with the objective of our expressing an opinion on the financial statements. The Responsibilities of the Auditor We will conduct our audit in accordance with auditing standards generally accepted in the United States of America. The standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material of the financial statements, whether due to fraud or error. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. Because of inherent limitations of an audit, together with the inherent limitations of internal control, an unavoidable risk that some material misstatements may not be detected exists, even though the audit is properly planned and performed in accordance with GAAS. Also, an audit is not designed to detect errors or fraud that immaterial to the financial statements. The Responsibilities of Management When appropriate those in management will provide the following: 1. Financial statements in accordance with accounting principles generally accepted in the United States of America. 2. Financial statements that are free from misstatement. 3. All information that is relevant to the preparation and fair presentation of the financial statements such as records and documentation. a. Additional information that we may request from management for the purpose of the audit; b. Unrestricted access to persons within the entity from whom we determine it necessary to obtain audit evidence. As part of our audit process, when appropriate we will request from management, written confirmation with regard to representations made to us in connection with the audit such as: 1. That management has fulfilled its responsibilities as set out in the term of this letter, and 2. That it believes the effect of any uncorrected misstatements aggregated by us during the individually and in the aggregate, to the financial statements taken as a whole. The following are the timeframes and milestones of our audit: 1. Perform Preliminary Analytics – January 14,2013 2. Execution of Field Work (Walkthroughs and Detailed Testing) – February 25, 2013 3. Review Potential Exceptions with Applicable Management – March 15, 2013 4. Closing meeting – March 22, 2013 5. Draft Audit Report – March 29, 2013 6. Receipt of management responses – April 5, 2013 7. Issue Final Audit Report & Executive Summary – April 12, 2013 Fees Our fees are for the audit and accounting services described above are based upon the value of the services performed and the time required by the individuals assigned to the engagement, plus direct expenses. Our fee estimate is based upon the following criteria: 1. Anticipation of cooperation from company personnel. 2. Timely responses to our inquiries. 3. Timely completion and delivery of client assistance requests 4. Timely communication of all significant accounting and financial reporting matters 5. The assumption that unexpected circumstances will not be encountered during the engagement. If any of the aforementioned are not met then fees may increase. Reporting We will issue written report upon completion of our audit of Apollo Shoes Incorporated’s financial statements. Our report will be addressed to the board of directors of Apollo Shoes Incorporated. We cannot provide assurance that an unmodified opinion will be expressed. Circumstances may arise in which it is necessary for us to modify our opinion or withdraw from the engagement. This letter constitutes the complete and exclusive statement of agreement between Anderson, Olds & Watershed, CPAs, LLC and Apollo Shoes Incorporated. We appreciate the opportunity to be of service to you and believe this letter accurately summarizes the significant terms of our engagement. If you have any questions please let us know. If you are in agreement with this letter please sign and return the attached copy to acknowledge that you are in agreement with the arrangements for our audit of the financial statements. Best Regards, Ann Marie Owen Certified Public Accountant Anderson, Olds & Watershed, CPAs, LLC References Arens, A., Elder, R., & Beasley, M. (2012). Auditing and Assurance Services (14th ed.). New Jersey, NJ: Pearson Education Inc.