Concern about Apollo Audit

While looking over the planning material for Apollo Shoes, I came across a situation I would like to bring to your attention regarding a potential risk factor. I identified the risk in the recorded minutes for the meeting held on June 30, 2011, found on page 33 of the planning materials. It explains that Apollo will advance Mr. Lancaster’s secretary a personal loan in the amount of one million dollar. He suggested the loan to be recorded as “other receivables” rather than “employee advances” so shareholders would not be troubled by this amount. In addition, Mr. Lancaster asked for the check to be given directly to him and he would give his secretary the money in cash. In my opinion, the loan was handled in a questionable manner. Apollo should not try to deceive their shareholders by recording the loan incorrectly, and the check should have been written directly to Mr. Lancaster’s secretary. Because of this suspicious behavior, I assess this situation to be high risk. If you have any more questions regarding this situation please feel free to call me at any time, (281) 579-3301.