The purpose of this letter is to introduce the accounting firm of Edronibug and to explain the auditing and assurance services we can offer to Apollo Shoes and the benefit of each service. I will also explain my role in providing these auditing and assurance services and provide a description of the requirements for meeting the professional standards for the assurance services offered to Apollo Shoes.
Auditing and Assurance Services
According to Arens, Elder and Beasley, “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.” The purpose of an audit is to provide ...view middle of the document...
If the procedures are not being followed, Edronibug will be able to determine where the concern is and make recommendations for improvement.
A financial statement audit is performed to verify whether the financial statements of Apollo Shoes are stated in accordance with specified criteria, such as in accordance with the U.S. accounting standards. In this type of audit, Edronibug would gather evidence to ascertain that the financial statements are free from material misstatements or errors. The benefits of a financial statement audit include increased confidence from outside parties that the financial statements are fairly presented, reasonably accurate and free of material misstatement. An opinion is issued by Edronibug and this opinion will place more credibility on the company’s financial results than if no audit is performed.
“An operational audit evaluates the efficiency and effectiveness of any part of an organization’s operating procedures and methods.” (p. 13). In this type of auditing, the evaluation is not limited to accounting processes. “They can include the evaluation of organizational structure, computer operations, production methods, marketing, and any other area in which the auditor is qualified” (p. 13). Upon completion of the audit, we will provide recommendations for improving the procedure analyzed during the audit. An operational audit can be beneficial by implementing the suggestions made by Edronibug. These suggestions may include methods to increase profitability, improve management, implement more effective policies or procedures and in some cases increase growth.
Additionally, Edronibug provides other assurance services such as a review of historical financial statements. In this type of engagement, the financial statements are reviewed to assure the financial statements are in conformity with accounting standards. A report is issued upon completion of a review but it provides less assurance than an audit would. A benefit of a review is that it is less expensive than an audit but still provides assurance.
As senior manager, my role in providing the audit and assurance services is to obtain an understanding of Apollo Shoes’ environment and the industry in which Apollo operates. Obtaining an adequate understanding of Apollo’s business and processes is a key consideration in the planning phase of the engagement. This phase is...