Question

You are on the audit team of Apollo Shoes for the year ending December 31, 2015.

Your manager has asked you to draft the audit report for the year ended December 31, 2015.

Some other things to note:

Appollo Shoes is a public entity and you did not test controls for effectivness

The following were NOT noted during the audit

No departures from GAAP

No scope limitations

No material misstatements noted

No other inforamtion presented with the financial statements

Instructions: Prepare a draft of the audit for Apollo Shoes as of December 31, 2015

Expert Answer

Answer 1

Solution:-

We have audited the accompanying financial statements of Apollo Shoes, Inc., which comprise the balance sheet as of December 31, 2015, and the related statements of income, changes in shareholders’ equity, and cash flows for the year then ended, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. 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.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion

Opinion Paragraph

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Apollo Shoes Inc. as of December 31, 2015, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.