Apollo Shoes

Part I

From the case it appears that the sets of evidence gathered for the audit of Apollo Shoes Inc. are sufficient to support the audit opinion. However, a red flag exists as regards the verification of the results of the last year’s audit. Since the audit report is for a set of comparative statements, that is the financial statements for the years ended December 31, 2006 and 2007, it is also important that the financial statements of the year ended December 31, 2006 are fairly presented in accordance with generally accepted accounting principles in the United States.

Moreover, additional precautions should be taken such as higher sample. This is so because the examined minutes of the meeting shows that there is pressure for management to maintain good numbers such as increasing sales and profit. The additional audit procedure ensures that there is no undue pressure for management to override Apollo Shoes Inc.’s integral control over financial reporting.

The audit report will follow the standard unqualified audit report since the audit evidence is sufficient to support the issuance of such report. There are no noted exemptions to the audit engagement; hence a departure to the scope portion of the standard unqualified audit report is not merited. Moreover, though there were errors or deviations discovered during the audit, the financial statements for the years ended December 31, 2006 and 2007 were reinstated hence no generally accepted accounting principles was violated.

The audit reports primarily communicate the auditor’s findings on the financial statements under audit to third parties including the stockholders of the client. These third parties usually rely on the report for the assurance that the company’s financial statements are fairly presented in accordance with generally accepted accounting principles. The evidence gathered for the audit were accumulated in accordance with the audit procedure created by Darlene Wardlaw and confirmed by DW. Several...