Essay Preview: Engagement Letter
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GA-1 ENGAGEMENT LETTER
Dear Mr. Lancaster,
This letter will confirm our understanding of the arraignment of our audit of the financial statements of Apollo Shoes, Inc. for the year ending December 31, 2011.
We will audit the Companys balance sheet at December 31, 2011, and the related financial, such as, statements of income, comprehensive income, stockholders equity, and cash flow for the year then ended, for the purpose of expressing an opinion on them. We will follow audit standards and base our audit work on some samples of your transactions. We plan to look for major errors and frauds in the financial statements. And also our tax staff person will do the state and federal returns, and our audit manager will have them reviewed by Maria Olds, our tax partner. Our audits also will the 10-K filling material, and review tax work. In order to do the tax work, Sarbanes-Oxley requires that we get prior approval from the audit committee to perform both the tax work as well as the audit.
We will conduct our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards that require us to plan and perform the audit to attain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Based the special situation of your company, we will focus on fraud examination and internal control. We will communicate with your staffs for some questions and problems.
We will give you a list of schedules for various accounts, and we appreciate that you have those accounts ready when we start. Those accounts will help us work. Our efforts on your behalf can only be enhanced through your bringing to our attention any comment you may have in this respect, whether praise or criticism. If you have any concerns in this regard during the course of our professional relationship with you, please let us know immediately.
Our policy is to serve you with the most effective support systems available, while at the same time allocating the costs of such systems consistent with the extent of usage by individual clients. Because the complex situation of your company, it is difficult to give you a fixed fee deal, but through our estimate, considering the additional work, is $750,000.