can someone please help me with this about Apolo case

Date: 21 OCT 2017 00:42:35 +0000 From: "Darlene Wardlaw" Subject: Upcoming Apollo Shoes Engagement Attachment: <>

Well, first let me congratulate you on your recent promotion. Although we have not worked on an engagement together before, I have heard many good things about you. I look forward to working with you on the new Apollo Shoes engagement.

I understand that this is your first engagement to work as an in-charge. Arnold Anderson (aka Uncle Arnie) will be the engagement partner; he is pretty sharp so youll have to stay on your toes. As engagement manager, Ill try to help out as much as I can. Understand, however, that I am managing four other busy season engagements, so my interaction time with you will be limited. For now, I want you to familiarize yourself with Apollo Shoes and help me out by doing the following:

1. SEC Filing: I have asked Larry Lancaster, President and chairman of the Apollo Shoes board of directors, to send you a copy of last years (2016) 10-K filing with the SEC. Review the information when you receive it, as it is one of the most important sources of information about a company being audited.
2. Audit Committee Meeting: I have attached the minutes of an audit committee meeting that occurred last week. Please review the minutes of the meeting and draft an appropriate engagement letter (label it GA-1, for General and Administrative, page 1) addressed to Mr. Lancaster. (Since this is our first year on the engagement, you might want to check one of your old auditing textbooks for an example.) Ill review the letter before getting Arnold to sign it.
3. Audit Team: Based upon the information that you glean from 1 and 2 above, do you see any need for special business knowledge in regard to the basic type of business and products Apollo manages? Do you see any need for special audit or accounting expertise for any of the work that we have agreed to perform? In other words, since youll be in the trenches, what kind of expertise do you want on your audit team? Just write a brief (one-page) audit staffing memo (GA-2) telling me what expertise (e.g., tax specialist, IT specialist, etc.) you need to complete the audit and Ill see if I can get them assigned to the audit team.
4. Scheduling: We are going to have to work around your other engagements, but we have you tentatively scheduled for one week in October (next week) for bringing you up to speed on Apollo and its industry, and five straight weeks beginning the last week in December for engagement planning, internal control evaluation, and substantive testing.

Finally, since most of our interaction will be by e-mail, please forgive me if I give you too much detail. Since we havent worked together before, Id rather give you too much than too little until we get used to working together.

DW

Minutes of the Audit Committee, Apollo Shoes

October 17, 2017

Present at Meeting: Arnold Anderson, CPA (partner in charge of the audit); Darlene Wardlaw, CPA (engagement manager); Eric Unum (Apollos vice president of finance); Mary Costain (Apollos treasurer); Samuel Carboy (Apollos controller); and Karina Ramirez (Apollos director of internal audit). The three members of the audit committee of the board and the corporate secretary also were present, but they did not enter into the conversation.

Mr. Unum (VP finance): Well, I want to welcome the auditing firm of Anderson, Olds, and Watershed, CPAs to what we call the Apollo Shoes Experience. After our old auditors, Smith & Smith, CPAs, unexpectedly withdrew from the engagement, we were very happy to have a firm of your quality to come aboard.

Mr. Anderson (partner on the audit): Well, we are always looking for high quality clients. By the way, why did your previous auditors resign?

Mr. Unum (VP finance): Id rather not talk about it. Arnold, will Darlene be in charge?

Mr. Anderson (partner on the audit): Yes, and she will be assisted by several of our best staff, including an income tax specialist and an information technology auditor. We need to keep up to date on your computer information systems. Back to your previous auditors, with your permission, we would like to contact them.

Mr. Unum (VP finance): Well, wed rather you didnt. There may be some litigation since they withdrew from the engagement with so little notice. Is it necessary for you to speak with them to accept the engagement?

Mr. Anderson (partner on the audit): No, not really, but it does raise some concerns for our firm.

Ms. Costain (treasurer): In the past, we have never had any unpleasant discoveries of embezzlement or theft, but we always want to be vigilant. Will you plan enough in-depth auditing to give us assurances about errors and frauds in the accounts?

Ms. Wardlaw (manager on the audit): We will follow audit standards and base our audit work on samples of transactions. We plan the work to look for major errors and frauds in the accounts, but cleverly hidden schemes might not be discovered.

Ms. Ramirez (internal auditor): Darlene, I agree, its hard to uncover clever schemes. While I am new to Apollo, none of the projects that I have undertaken this year shows anything amiss, other than normal human error types of mistakes.

Ms. Costain (treasurer): This year, we want to add some work to the audit. I am short on staff time and need to have you prepare the state franchise tax return as well as the federal tax returns.

Ms. Wardlaw (manager on the audit): Our tax staff person can do the state and federal returns, and I will have them reviewed by Maria Olds, our tax partner. In order to perform the tax work, Sarbanes-Oxley requires that we get prior approval from the audit committee to perform both the tax work as well as the audit.

Mr. Anderson (partner on the audit): I assume you also want us to review the 10-K filing material?

Mr. Unum (VP finance): Yes. Will you need any staff help from us?

Ms. Ramirez (internal auditor): Last year, Apollo was able to save on audit fees when my staff prepared a stack of schedules and analyses that our previous auditors needed.

Ms. Wardlaw (manager on the audit): Yes, Karina, I will give you a list of schedules for various accounts. I will appreciate your having them ready when we start fieldwork near the beginning of January.

Mr. Carboy (controller): Speaking of being ready, we will be able to give you a trial balance the day after December 31, on New Years Day!.

Mr. Unum (VP finance): How much is this going to cost us?

Mr. Anderson (partner on the audit): It is difficult to give you a fixed fee deal, but my estimate, considering the additional work, is $750,000. Darlene will let you know immediately if problems arise to cause the work to be more extensive.

Mr. Unum (VP finance): Thank you. This has been a productive meeting of the minds. We look forward to your getting started next month.

Meeting ended 5:30 p.m. /s/ Jeff Chesnut, Secretary