Individual assignment: Beginning the audit report
Mr. Larry Lancaster
Chairman, CEO and President
Apollo Shoes, Inc.
Dear Mr. Lancaster,
Through this letter, we would like to show our acceptance and understanding related to this engagement. As requested, we will be auditing the balance sheet of Apollo Shoes, Inc. as of December 31, 2007, and the related statements of income, comprehensive income and cash flows for the year ended. The objective of our audit is to express an opinion on whether financial statements are presented fairly in accordance with generally accepted accounting principles and are free from material errors or misstatements.
The audit will be conducted according to International Standards on Auditing. In compliance with these standards, the audit should be planned and performed so that reasonable assurance can be obtained that financial statements do not contain material misstatements. The audit involves checking, on test basis, the evidence relating to amounts as well as disclosures in financial statements. It also involves assessment of accounting principles as well as significant estimates used in preparing accounts.
However, there is a risk that certain material misstatements might not be discovered due to the inherent limitations of audit and accounting or internal control system of your company.