Thank you for taking the time to meet with Arnold Anderson, CPA (lead auditor); Darlene Wardlaw, CPA (engagement manager) and me last week. During our meeting, you and your team informed us that your “old auditors, Smith & Smith, CPAs, unexpectedly withdrew from the engagement” (University of Phoenix eCampus, ACC/546, Apollo Shoes Casebook).
Anderson, Olds, and Watershed (AOW), CPAs appreciated the opportunity to conduct your upcoming audit. For the past 15 years, AOW has done successful audits for clients. Our CPAs are highly educated, thoroughly trained, and knowledgeable of current accounting standards. I am assigned to the auditor for Apollo Shoes, Inc. (Apollo).
In this letter, please find details on the auditing and other assurance services our firm offers and the benefit each has for your company. An overview of my role as an auditor and certain requirements I will need to meet professional standard. Lastly, I will describe the ethical implication of the audit.
“In 2002, the Sarbanes-Oxley Act (SOX) established the Public Company Accounting and Oversight Board (PCAOB)” (U. S. Securities and Exchange Commission, 2014).
The CEO and CFO are held accountable for the company’s financial records under Section 404, which “requires clear documentation and an audit of the company’s internal control environment” (Arens, Elder, and Beasley, 2014, p. 4).
The Business plan on Percieved Value of Mandatory Audits to Small Companies
|Perceived value of mandatory audits of small companies | | |Author(s): |Shifei Chung, (Assistant Professor, Department of Accounting & Finance, Rowan University, Glassboro, New | | |Jersey, USA), Ramesh Narasimhan, (Associate Professor, Department of Accounting, Law & Taxation, Montclair | | |State University, Montclair, New Jersey, USA) | |Citation: |Shifei Chung, Ramesh Narasimhan, ( ...
“Publicly held businesses that file reports with the SEC” are required by federal securities laws to prepare financial statements according to “Generally Accepted Accounting Principles” (GAAP) (U. S. Securities and Exchange Commission, 2014).
The financial statements require annual audits. “Auditing is the accumulation and evaluation of evidence about information to determine and report on the degree of correspondence between the information and established criteria” (Arens, Elder, and Beasley, 2014, p.4).
So, the audit is performed to ensure the accuracy of the financial statements.
AOW offers both auditing and other assurance services to clients. Our firm offer audits in three categories: financial, operational, and compliance. The most common form of audit services is a financial statement audit. Through a financial statement audit, auditors conclude whether or not the financial statements are in accordance with GAAP. There are significant benefits to financial. Internal and external users use financial statements for a variety of reasons. Financial statements communicate the financial position of the company to stakeholders. The audit report provides value to the firm by offering potential investors the assurance that the financial stability of the enterprise is accurate. The fear of risks involved in investing in the company may be diminished through the submission of the audit report. From an investor standpoint, financial audits give them an overview of the effectiveness of established internal controls used by the company.
Assurance services take it a step further by not only evaluating financial reports, but also analyzing the day-to-day operations of the corporation. Our firm will review “internal controls to assess their effectiveness and efficiency. Other assurance services analyze the internal accounting controls to assure that the company’s systems are appropriately designed and operating effectively” (U. S. Securities and Exchange Commission, 2014).
The Essay on Are financial accounting statements useful to investors?
1.1 IntroductionFinancial accounting statements are summaries of monetary data about an enterprise and are used in an attempt to help make informed decisions in the present and future.Financial statements portray the effects of transactions and other events by grouping them into broad classes (or elements) according to their economic characteristics.The three basic financial statements are the ...
Operational audits “analyze the internal accounting controls to assure that the company’s systems are appropriately designed and operating effectively” (U. S. Securities and Exchange Commission, 2014).
Compliance audits check to see if the company adhered to rules and regulations set forth by agencies of authority. Potential problems could impact the profitability of the enterprise. My firm will find these issues so your company may address them. Several risks factors may also be eliminated by these services. For example, the audit reports will identify inefficient practices and areas in which revenue was uncollected. Your firm can be sure that the company is functioning appropriately and as efficiently as possible through the services we provide.
As an independent auditor, my role is to examine “the company’s financial statements and to prepare a written audit report” that is credible and sufficient (U. S. Securities and Exchange Commission, 2014).
In order to do this, I will “gather appropriate and” adequate “evidence to confirm reasonable assurance” (Gelman, Rosenberg, & Freedman, 2014).
The audit report communicates the extent to which the financial statements adheres to the standards set forth by the GAAP (U. S. Securities and Exchange Commission, 2014).
As auditors, our focus is to determine whether the records directly correlates with activities during a particular accounting period. To successfully conduct the audit, I will provide a list of schedules for various accounts needed to carry out the review. Effective communication is necessary to ensure all necessary details are collected to provide an accurate assessment of the company.
The most relevant standard and rule set forth by the “American Institute of Certified Public Accountants of the CPA profession is the Code of Ethics” (Arens, Elder, and Beasley, 2014).
“Professional ethics, often called applied ethics, suggests a commonly accepted sense of professional conduct that is translated into formal codes of ethics” (Seitel, 2011, p. 109).
Compliance is a huge issue. Auditors have an ethical responsibility to thoroughly perform the audit and to provide reasonable assurance. Establish rules and procedures should be followed accordingly. Furthermore, there should be consequences for anyone that chooses not to follow them.
The Essay on Audit Postulates Financial Auditors Current
Mautz and Sharaf presented an interesting idea about the postulates of auditing. In their study, they stated that the postulates were the basis, the assumptions, and the starting point for building the auditing structure. My generalization about the postulates is as follows: In my opinion, the postulates were valid in 1961. This was because Mautz and Sharaf carefully conducted a study and ...
My firm will provide further communication in the days to come. In the meantime, please gather the list of financial reports provided in the attachment. Feel free to contact my office with any questions or concerns. Again, thank you for this opportunity.
References
Arens, A. A., Elder, R. J., & Beasley, M. (2014).
Auditing and Assurance Services (15th ed.).
Upper Saddle River, NJ: Pearson. Retrieved December 9, 2014 from The University of Phoenix eBook Collection database. Gelman, Rosenberg, & Freedman, CPA (2014).
What an Auditor Does and Doesn’t Do. Delphia Consulting. Retrieved December 15, 2014 from http://www.grfcpa.com/resources/publications/auditor-responsibilities/. Seitel, F. P. (2011).
Chapter 6: Ethics. In The Practice of Public Relations (11th ed).
Pearson Education, Inc. Retrieved September 9, 2014 from The University of Phoenix eBook Collection database. U. S. Securities and Exchange Commission. (2014).
All about Audits. Retrieved December 13, 2014 from http://www.sec.gov/investor/pubs/aboutauditors.htm.
