Auditing Introduction Letter to Aplollo Shoes, Inc - Essay Example

Larry Lancaster, Chairman, President and CEO Appolo Shoes, Inc 100 Shoe Plaza, Shoetown, ME 00001 RE: AUDITING AND ASSURANCE SERVICES This letter is to confirm the arrangements and understanding of the upcoming audit of your company. I will to take this opportunity to explain few points about audit and assurance services offered by the firm. The firm is proud to have been in operation for more than 15 years by providing excellent services to clients. We have qualified personnel in all departments who provide a number of services such as auditing and assurance, risk management and internal controls.

The firm provides numerous auditing and assurance services which are customized according to each client needs. The objective of the audit is to provide an opinion on the fairness of the financial statements and conformity with the Generally Accepted accounting principles in the United States. Some of auditing and assurance services offered firm include but not limited to financial statements audit, compliance audit and operational audit. Compliance audit will identify the level of compliance with regulations, procedures and rules while financial statements audit will determine the fairness of the financial statements.

Operational audit will determine the efficiency of processes such as marketing, organizational structure and production methods (Luis, 2008). Some audit services include auditing of the historical financial statements, audit of the effective of the internal controls and systems, audit of employee benefit plans, cash flow audits, physical confirmation of inventories, direct assurance of existing of payable and receivables by direct correspondence with financial institutions and creditors, auditing of tax returns and compliance with the tax regulations, physical review of assets and properties, risk management assessment and capital adequacy audits (Manson & Gray, 2008).

The audit will benefit your organization since it will give shareholders an assurance that the financial statements are true and fair, the audit will identify any potential weaknesses in the internal control procedures and provide appropriate recommendations (Luis, 2008). The audit will assist your organization in complying with the legal regulations and suggest measures of improving efficiency of operations through cutting costs. My role as an auditor will include detecting any misstatements in accounts receivables, sales, and cash receipts.

I will evaluate the evidence on a test basis to ascertain whether the financial transactions reported in the financial statements relate to the period of reporting. It will assess whether the financial statement amounts such as revenues and expenses are correctly valued according to the accounting policies and standards (Manson & Gray, 2008). I will also review whether the amounts are appropriately described, classified and disclosed according to prevailing standards. I will detect material errors and fraud such as collusion with creditors and overvaluation of business assets (Luis, 2008).

The audit will involve identifying weaknesses in internal control procedures and deficiencies in the design of the internal control and reporting measures. We will prepare the income tax returns with relevant schedules and recommend on measures of improving the tax reporting system. However, the responsibility of tax liability is only limited to the reporting period of the audit and does not extend to prior periods (Luis, 2008). In inventory valuation, we will identify whether