Apollo Shoes Auditing Introduction Letter

Auditing Introduction Letter

Kristen Mihevc
ACC/546
March 3, 2013
Scott Phillips
March 3, 2013
Joe Bootwell
Executive Senior Vice-President and CFO
Apollo Shoes Inc.
100 Shoe Plaza
Shoetown, ME 00001
Dear Mr. Bootwell,
Thank you for taking the time to speak with Arnold Anderson, Darlene Wardlaw, and me last week. I
understand from our conversation that you recently parted ways with your former auditing firm as a
result of mutually incongruent goals. I appreciate your interest in Anderson, Olds, and Watershed
(AOW) and want to explain some of the many audit and assurance services that my firm has to offer.
As a publicly traded company, the Securities and Exchange Commission (SEC) requires Apollo
Shoes to submit audited financial statements as part of its annual 10-K filing. The Sarbanes-Oxley
Act of 2002 also requires auditors to attest to the effectiveness of internal controls in the financial
reporting process. My firm has years of experience in supporting organizations with these
requirements. Not only is an independent audit of financial statements required by law, but it can
also serve to provide external stakeholders with assurance that your financial statements are fairly
presented in accordance with generally accepted accounting principles (GAAP). These stakeholders,
including banks, investors, and other creditors, rely on this assurance to assess the amount of risk
involved in investing in your business. Often, a

of audited financial statements can help increase investment in an organization and decrease its
cost of capital. Furthermore, an audit of a firms financial statements can help to identify fraudulent
activity within the organization.
In addition to an audit of financial statements, AOW has experience in conducting audits and reviews
of historical financial statements. A review of historical financial statements is similar to an audit but
requires less evidence and results in a lower level of assurance. The assurance provided by a
review of historical financial statements is often sufficient to meet the needs of external stakeholders
and may be of interest to Apollo Shoes considering the firms recent decision to change auditors.
A final service we offer at AOW that may benefit Apollo Shoes is our SysTrust attestation service.
The AICPA and CICA have issued a collection of five Trust Services principles and the corresponding
criteria an organization must meet to ensure information system integrity and reliability. This
attestatn.prorpeon service involves the evaluation of a computer system by a SysTrust licensed CPA
to ensure that it meets the criteria of security, availability, processing integrity, online privacy, and
confidentiality. Controls over the new system are tested, and a report is issued to management
about the reliability of the firms information systems. Having implemented a new information system
in July, Apollo Shoes may find benefit in receiving assurance that the new system is operating as
intended.
Anderson, Olds, and Watershed is committed to meeting the generally accepted auditing standards
(GAAS) as defined by the AICPA. These guidelines encompass appropriate technical training and
proficiency, field work standards, and reporting requirements. Each auditor in our firm has met
minimum educational and experience requirements and is a licensed Certified Professional
Accountant. Our auditors pride themselves on maintaining independence in mental attitude and are
careful to exercise due professional care. During the field work phase of each audit or attestation
service, the work will be appropriately planned and supervised. Each auditor assigned to the
engagement will obtain a sufficient understanding of Apollo Shoes business and the external
environment in which it operates, and ample evidence will be tested to enable AOW to issue an audit
report that provides reasonable assurance regarding the accuracy of the information audited. In
addition to stating whether the audited information is presented in accordance with GAAP or other
applicable standards, the final audit report will identify any principles that have been inconsistently
applied as well as any inadequate disclosures discovered in the audited information.
As Senior Auditor, my role in providing audit and assurance services involves obtaining an adequate
understanding of Apollos business and planning the audit or review. I will also be responsible for
coordinating and supervising the team of Staff Auditors who will gather and test evidence in support

of the information being audited. All audit work will be reviewed by the Audit Manager (Darlene
Wardlaw) and a firm partner (Arnold Anderson), who will have ultimate responsibility for the
engagement. At the end of each audit or review, you will receive a formal report that includes AOWs
opinion as to whether the audited information is presented in accordance with GAAP and provides
external stakeholders with a fair representation of the firms financial situation.
Joe, it was a pleasure meeting with you last week and learning about the products your firm provides
to the marketplace. I hope that you will find that Anderson, Olds, and Watershed offers a variety of
services designed to meet the auditing and assurance needs of your firm. Should you have any
questions about the services outlined above, please do not hesitate to contact me, Darlene, or
Arnold directly. I look forward to working with you in the future.
Sincerely,
Kristen Mihevc
Senior Auditor
Anderson, Olds, and Watershed
cc: Arnold Anderson
Darlene Wardlaw
References
Arens, A.A., Elder, R.J., & Beasley, M.S. (2012). Auditing and assurance services: An integrated
approach (14th ed.). Upper Saddle River, NJ: Pearson Prentice Hall
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