Saturday, May 25, 2019
Audit Staffing Memo Essay
I first wanted to thank you for congratulating me on my recent promotion I look forward to working with you on the new Apollo Shoes engagement. I have read all the information you sent me about Apollo Shoes to gain a better understanding of the company, and I feel like I have a firm grasp of the company structure and environment. After reviewing the companys last three get along with of directors meetings, I determined what expertise would be necessary to carry out the audit on Apollo Shoes. If you can assign these staff to our audit team, the productivity and effectiveness of the audit testament increase significantly. The first staff member that would be greatly helpful to our audit team would be an information technology specialist. In the board meeting held on June 30, the board authorized up to $1.2 million for the purchase and installation of a new information system. However, to fund the purchase and compensation other expenses, the board authorized a draw of over $44 mill ion, which seems very excessive.Having an IT specialist impart help us determine the total terms of installing a new information system and bring light to why the board drew over $44 million to fund the purchase. some other staff member that would be helpful to our audit team would be a property, plant, and equipment specialist. Despite authorizing the purchase of equipment totaling $1.3 million in January of 2014, the equipment was still not aim up during the January 2015 board meeting. A property, plant, and equipment specialist could help us determine the accounting implications of purchasing the equipment in 2014 and still not having it set up in 2015, as far as depreciation and cost recognition are concerned. Quite possibly the most important staff member that we will aim on our audit team is a lawyer or legal expert, for a variety of different situations.The first and most glaring situation that will need to be addressed is the board advancing $1,250,000 directly to Mr. L ancaster to cover personal legal expenses for his secretary. Recording it in other receivables instead of employee advances and drawing a check directly to Mr. Lancaster set off a red flag for us and we would like a legal expert to look further into the situation. other situation that will need the attention of a legal expert is a class action suit that was brought against Apollo Shoes for gross negligence and infringement of warranty for $12,000,000. A legal expert could help usdetermine the probability that Apollo Shoes will lose the case.The company does not have amends to cover these types of actions, so losing this case could have huge implications on their cash balances. One of the last situations we would like the legal expert to look into was the retroactive annunciation of dividends in January of 2015. At that board meeting, they approve to declare the dividends in the previous year, which we are not sure is allowed, so a legal expert could perpetrate us better insight into the situation. These three specialists seem to be the most necessary staff members after reviewing all of the companys board meetings, and they will be of substantial help if you could assign them to our audit team. If I determine that I need any additional staff support in the future, I will let you know throughout the audit process.