Apollo Shoes Engagement Letter

Apollo Shoes Engagement Letter

Elizabeth A. Rowe

ACC/546: Auditing

Jacob Matthews

October 22, 2012

Larry Lancaster, President & Chairman

Apollo Shoes, Inc.

100 Shoe Plaza

Shoetown, ME 00001

October 22, 2012

Mr. Lancaster,

This letter will confirm our understanding of the services that Anderson, Olds, and Watershed (AOW) will be providing to Apollo Shoes’ (Apollo). We will conduct an audit of the financial statements of Apollo for the year ending December 31, 2007. In addition, AOW will prepare the state franchise tax return and federal tax return for Apollo.

The purpose of the audit is to attain reasonable assurance that Apollo’s financial statements are free from material misstatement, whether by fraud or error, so AOW can render an opinion of Apollo’s financial statements on the fairness of presentation and compliance with U.S. generally accepted accounting principles.

AOW will perform the audit in accordance with U.S. generally accepted accounting standards. This will require the testing of Apollo’s records, internal controls, and any other tests deemed necessary to form an opinion. If the opinion is not unqualified, we will discuss confer with you regarding the reasons. If, for any reason, AOW is unable to complete the audit or form an opinion, AOW may decline to express an opinion or issue a report as a result of the engagement.

The financial statements are management’s responsibility. In addition, management is responsible for the following:

* Adopting sound accounting policies;

* Creating and sustaining effective internal control;

* Identifying and ensuring compliance with the applicable laws and regulations;

* Making all financial records and related information available to AOW;

* Providing AOW with a representation letter confirming management’s responsibility for the preparation of the financial statements in accordance U.S. GAAP, the absence of fraud involving management, etc.

AOW will plan and...