[pic]APOLLO SHOES, INC.

An Audit Case to Accompany

AUDITING AND ASSURANCE SERVICES

SUGGESTED SOLUTIONS

Prepared by

Professor Cal Christian
East Carolina University

Professor Tim Louwers
James Madison University
Introduction

We designed the Apollo Shoes audit case to introduce students to the entire audit process, from planning the engagement to drafting the final report. Students are asked to assume the role of a veteran of two-to-three “busy” seasons, “in-charging” for the first time. Communication between the students and client personnel and other firm members takes the form of e-mail messages from the engagement partner (Arnold Anderson), the engagement manager (Darlene Wardlaw), an intern (Bradley
|45 |
|Prepare a Memo evaluating the Apollo computer system and how planning may be affected by the computer |46 |
|processing of accounting transactions. | |

Points to Remember: • Engagement Letter o The engagement letter from the textbook should be modified to include only the additional work to performed on this audit (the Federal Tax and State Franchise Tax return) o The completion date of the audit. Under new PCAOB the new due date is 45 days after year end (this is being phased in so the answers may vary). o The audit fee (students will need this again when examining accounts payable). o The standards are those of the Public Company Accounting Oversight Board • Review of the Minutes o This review will vary among students. The main point is to insure that the student understands the significance of this review in the planning stages. o You want the student to present their findings in such as a way, so that they can easily refer back to their recommended audit action. o This is also an excellent time to emphasize the importance of audit documentation. Many students will not think about including copies of the minutes with the review memo.