1 2 3 B Apollo Shoes, Inc. AUDIT PLAN PLANNING FYE 12/31/2020 C D E F A-0 You are responsible for completing all steps highlighted in green. Workpaper Reference Related Assertion (s) Performed by DW 4 5 1 Complete client engagement acceptance form. Review correspondence files, prior year audit TBA workpapers, permanent files, financial statements and NA auditor's reports. 6 2 Obtain 2019 audited trial balance and 2020 unaudited trial balance. 7 3 8 4 Obtain and review a copy of the prior year 10K. 9 a 10 b Foot balances and ensure mathematical accuracy of PBC trial balances. Trace prior period balances to the closing balance in the prior period's financial statements (10-K). Note: some amounts on the financial statements are the sum of multiple TB accounts. Determine the extent of involvement, if any, of 11 5 consultants, specialists, or internal auditors. 12 a DW A-1 and A-2 DW A-3 DW Comments The PY 10K is included in the workpapers at A-3, the PY workpapers are not available per Apollo. See board of director meeting minutes for more Trial balance obtained on 01/01/2021 from Samual Carboy, Apollo Controller. Obtained by DW on 12/24/2020. NA DW Some reliance on internal audit will be necessary. If the work of another is being used in the engagement, determine that it is used in accordance NA with professional standards. DW Apollo Director of Internal Audit - Karina Ramirez will be assisting on the audit, per my (DW) review of her qualifications and the organizational structure of Apollo I have concluded that she is both objective and competent. Notes on A-3. Review the minutes of the board of directors and committee meetings for the year and any new agreements, leases, contracts, or other important documents. Obtain copies of the minutes or A-3 TC agreements for the current or permanent workpaper 13 6 files. Highlight matters relevant to the related audit area or for which disclosure will be required in the financial statement or notes. Obtain an engagement letter from the client. A-4 DW 14 7 Signed copy of engagement letter received from the client on November 15 8 Complete Materiality Memo. A-5 Complete a time budget by audit area. A-6 DW 16 9 Determine staffing assignments based on consideration Rough draft completed, new senior to track and expand time tracking. Staff determined as of 12/01/2020 17 of audit risks, and discuss the preliminary audit plan and key dates, i.e. inventory observation, mailing of 10 confirmations, etc. with the audit staff. A-7 DW Complete independence forms for all firm employees. NA NA 18 11 Electronically signed by all firm employees and filed on firm intranet as of December 31, 2020. 19 20 21 G H 1 2 3 A AccountID B 2019 Trial Balance Apollo Shoes, Inc Trial Balance (Audited) 31-Dec-19 AccountDescription 10100 Cash on Hand 10200 Regular Checking Account 10300 Payroll Checking Account D E F G PBC Debit Credit Single Column format $1,987.28 $198,116.52 $0.00 $1,987.28 $198,116.52 $0.00 10 10400 Savings Account $3,044,958.13 $3,044,958.13 11 11000 Accounts Receivable $16,410,902.71 $16,410,902.71 12 11500 Allowance for Doubtful Accounts $1,262,819.88 ($1,262,819.88) 13 12000 Inventory - Spotlight $18,825,205.24 $18,825,205.24 14 12300 Reserve for Inventory Obsolescence $3,012,000.00 ($3,012,000.00) 15 14100 Prepaid Insurance $743,314.38 16 14200 Prepaid Rent $200,000.00 17 14300 Office Supplies $7,406.82 18 14400 Notes Receivable-Current $743,314.38 $200,000.00 $7,406.82 $0.00 19 14700 Other Current Assets $0.00 20 15000 Land $117,000.00 $117,000.00 21 15100 Buildings and Land Improvements $623,905.92 $623,905.92 22 15200 Machinery, Equipment, Office Furniture $433,217.10 $433,217.10 23 17000 Accum. Depreciation $163,500.00 ($163,500.00) 24 19000 Investments $572,691.08 25 19900 Other Noncurrent Assets $53,840.59 26 20000 Accounts Payable $4,633,118.09 27 23100 Sales Tax Payable 28 23200 Wages Payable $0.00 $29,470.32 $572,691.08 $53,840.59 ($4,633,118.09) $0.00 29 23300 FICA Employee Withholding $1,318.69 30 23350 Medicare Withholding 31 23400 Federal Payroll Taxes Payable $6,033.01 $583.99 ($6,033.01) ($29,470.32) ($1,318.69) ($583.99) 32 23500 FUTA Tax Payable $0.00 33 23600 State Payroll Taxes Payable $2,815.47 ($2,815.47) 34 23700 SUTA Tax Payable $0.00 35 23800 FICA Employer Withholding 36 23900 Medicare Employer Withholding $1,318.69 $583.99 ($1,318.69) ($583.99) 37 24100 Line of Credit $10,000,000.00 ($10,000,000.00) 38 24200 CurrentPortion Long-Term Debt $0.00 39 24700 Other Current Liabilities $0.00 40 27000 Notes Payable-Noncurrent $0.00 41 39003 Common Stock $8,105,000.00 ($8,105,000.00) 42 39004 Paid-in Capital $7,423,000.00 ($7,423,000.00) 43 39005 Retained Earnings 44 40000 Sales $2,219,620.65 $246,172,918.44 ($2,219,620.65) ($246,172,918.44) 45 41000 Sales Returns 46 42000 Warranty Expense $4,497,583.20 $1,100,281.48 $4,497,583.20 $1,100,281.48 47 45000 Income from Investments $0.00 $0.00 48 46000 InterestIncome $204,302.81 ($204,302.81) 49 50010 Cost of Goods Sold $141,569,221.61 $141,569,221.61 50 57500 Freight $4,302,951.46 $4,302,951.46 51 60000 Advertising Expense 52 61000 Auto Expenses 53 62000 Research and Development 54 64000 Depreciation Expense 55 64500 Warehouse Salaries 56 65000 Property Tax Expense 57 66000 Legal and Professional Expense $3,605,133.96 $897,140.01 $208,974.39 $31,212,334.17 $133,000.00 $4,633,383,82 $80,495.32 $897,140.01 $208,974.39 $31,212,334.17 $133,000.00 $4,633,383,82 $80,495.32 $3,605,133.96 58 67000 Bad Debt Expense 59 68000 Insurance Expense 60 70000 Maintenance Expense 61 70100 Utilities 62 70110 Phone 63 70120 Postal 64 71000 Miscellaneous Office Expense $17,023.27 $1,622,425.99 $853,942.65 $61,136.04 $135,642.99 $76,373.78 $128,033.21 $135,642.99 $76,373.78 $128,033.21 $17,023.27 $1,622,425.99 $853,942.65 $61,136.04 65 72000 Payroll Tax Exp $1,550,989.06 $1,550,989.06 66 73000 Pension/Profit-Sharing Plan Ex $3,000,000.00 $3,000,000.00 67 74000 Rentor Lease Expense $2,603,485.87 $2,603,485.87 68 77500 Administrative Wages Expense $16.875,305.98 69 78000 Interest Expense 70 78500 Income Tax Expense-Federal 71 78510 Income Tax Expense - State 72 80000 Loss on Legal Settlement $875.000.00 $2,365,000.00 $429,000.00 $19,172,000.00 $16,875,305.98 $875,000.00 $2,365,000.00 $429,000.00 $19,172,000.00 73 74 75 76 77 B Apollo Shoes, Inc Preclosing Trial Balance 31-Dec-20 C D E F G PBC A-2 Account ID Account Description Debit Amt Credit Amt Single Column format 10100 Cash on Hand 10200 Regular Checking Account $2,275.23 $557,125.92 10300 Payroll Checking Account $2,275.23 $557,125.92 $0.00 10400 Savings Account $3,645,599.15 $3,645,599.15 11000 Accounts Receivable $51,515,259.98 $51,515,259.98 11400 Other Receivables $1,250,000.00 $1,250,000.00 11500 Allowance for Doubtful Accounts $1,239,009.75 ($1,239,009.75) 12000 Inventory $67,724,527.50 $67,724,527.50 12300 Reserve for Inventory Obsolescence $846,000.00 ($846,000.00) 14100 Prepaid Insurance $3,424,213.78 $3,424,213.78 14200 Prepaid Rent 14300 Office Supplies 14400 Notes Receivable-Current 14700 Other Current Assets 15000 Land $0.00 $8,540.00 $8,540.00 $0.00 $0.00 $117,000.00 $117,000.00 15100 Buildings and Land Improvemen $674,313.92 $674,313.92 15200 Machinery, Equipment, Office F $2,929,097.13 $2,929,097.13 17000 Accum. Depreciation $610,000.00 ($610,000.00) 19000 Investments $1,998,780.39 $1,998,780.39 19900 Other Noncurrent Assets $53,840.59 20000 Accounts Payable $1,922,095.91 $53,840.59 ($1,922,095.91) 23100 Sales Tax Payable $0.00 23200 Wages Payable $0.00 23300 FICA Employee Withholding $8,439.65 ($8,439.65) 23350 Medicare Withholding $11,414.99 ($11,414.99) 23400 Federal Payroll Taxes Payable $118,086.12 ($118,086.12) 23500 FUTA Tax Payable 23600 State Payroll Taxes Payable $55,106.86 $0.00 ($55,106.86) 23700 SUTA Tax Payable $0.00 23800 FICA Employer Withholding 23900 Medicare Employer Withholding $8,439.65 $11,414.99 ($8,439.65) ($11,414.99) 24100 Line of Credit $44,403,000.00 ($44,403,000.00) 24200 Current Portion Long-Term Debt $0.00 24700 Other Current Liabilities $0.00 27000 Notes Payable-Noncurrent $12,000,000.00 ($12,000,000.00) 39003 Common Stock $8,105,000.00 ($8,105,000.00) 39004 Paid-in Capital 39005 Retained Earnings 40000 Sales 41000 Sales Returns 42000 Warranty Expense $7,423,000.00 ($7,423,000.00) $6,590,483.64 ($6,590,483.64) ### ($242,713,452.88) $11,100,220.89 $1,158,128.47 $11,100,220.89 $1,158,128.47 45000 Income from Investments 46000 Interest Income 47000 Miscellaneous Income $1,426,089.31 $131,881.46 $2,166,000.00 ($1,426,089.31) ($131,881.46) ($2,166,000.00) 50010 Cost of Goods Sold $130,196,645.26 $130,196,645.26 57500 Freight $4,240,263.09 $4,240,263.09 60000 Advertising Expense $1,036,854.01 $1,036,854.01 61000 Auto Expenses $210,502.80 $210,502.80 62000 Research and Development $528,870.44 $528,870.44 64000 Depreciation Expense $446,000.00 $446,000.00 64500 Warehouse Salaries $4,720,715.56 65000 Property Tax Expense $99,332.45 66000 Legal and Professional Expense $4,913,224.45 67000 Bad Debt Expense 68000 Insurance Expense 70000 Maintenance Expense $35,502.87 70100 Utilities $137,332.18 $36,106.92 $4,720,715.56 $99,332.45 $4,913,224.45 $0.00 $36,106.92 $35,502.87 $137,332.18 70110 Phone $52,599.02 $52,599.02 70120 Postal $77,803.61 $77,803.61 71000 Miscellaneous Office Expense $24,891.82 $24,891.82 72000 Payroll Tax Exp $1,577,811.85 $1,577,811.85 73000 Pension/Profit-Sharing Plan Ex $3,630,375.80 $3,630,375.80 78600 Controllers' Clearning Account $330,375.80 ($330,375.80) 74000 Rent or Lease Expense $1,206,574.00 $1,206,574.00 77500 Administrative Wages Expense $16,197,225.43 78000 Interest Expense $2,591,736.50 $16,197,225.43 $2,591,736.50 A Plannina Audit Dunavom A 4 DDC Or A B C D Apollo Shoes, Inc Audit Budget 31-Dec-20 E F G H A-6 Prepared by: DW Reviewed by: AA Auditor Darlene Wardlaw Taylor Crump Senior Billing Rate Audit Area 357 Planning 225 Internal Control Testing Projected Hours Actual Hours Extended Cost 300 $ 107,100 275 $ 61,875 298 Cash 150 $ 44,700 Senior 298 Accounts Receivable 180 $ 53,640 1 Taylor Crump 225 Inventory 150 $ 33,750 2 Taylor Crump 225 Prepaids 90 $ 20,250 3 Taylor Crump 225 Property, Plant and Equipment 200 $ 45,000 + Taylor Crump 225 Other Assets 90 S 20,250 5 Senior 298 Current Liabilities 200 $ 59,600 B Senior 298 Notes Payable 150 S 44,700 7 Darlene Wardlaw 357 Stockholders' Equity 250 $ 89,250 3 Senior 298 Revenue 200 S 59,600 9 Taylor Crump 225 Expenses 200 S 45,000 0 1 2 3 4 5 Total $ 684,715.00 Contracted Price $ 750,000.00 Profit S 65,285.00 7 NOGAWN-1 CLIENT: PERIOD ENDED: B C Apollo Shoes December 31,2020 D Apollo Shoes ENGAGEMENT MATERIALITY (Required for all engagements) E F G H A-5 Prepared by Reviewed by This completed form must be provided to the engagement quality control reviewer in the planning stage of every audit. Please complete all the cells highlighted in yellow. PLANNING MATERIALITY CALCULATION 12 14 15 16 Only if the cument year net income (loss) (or other measure) is significantly different from the entity's historical results would 2-year averaging to obtain normalized net income (loss) (or other measure) be appropriate. PROFITORIENTED ENTITIES Net income (loss) Plus (minus) unusual, non-securing revenues and expenses, and extraordinary items. ADJUSTED NET INCOME (LOSS) Adjusted net income (loss) multiplied by: Current Year Prior Year TOTAL ASSETS Total assets multiplied by: 29 35 TOTAL REVENUES Plus (minus) unusual, non-cuming revenues ADJUSTED REVENUES Total adjusted revenues multiplied by: ** OF 22# #SFFP&NN22722858888868 89 +***** ***8588 $8 40 5% 1% 1% Current Year Current Year JUSTIFICATION OF PLANNING MATERIALITY 1. Financial data source (ie. actual, budget, projection): Year end trial balance, actual data obtained from client. 2. Basis (Le. normalized net income, revenue, total assets, other): Adjusted net income Justification: USE THIS BOX TO DOCUMENT AND JUSTIFY WHICH BASIS YOU'VE SELECTED 3. Percentage of financial data source used: 4. Amount selected (planning materiality) 5. Prior year's final materiality 6. Performance materiality/Tolerable misstatement 54 5% of planning materiality) 7. Listing scope (amount threshold for suggested adjustments) (using 5% to 10% of planning materiality based on expected level of adjustments is usually appropriate) 56 57 58 59 60 61 62 Engagement Partner 63 64 Engagement Quality Control Reviewer 65 Standard 5% used. 5% Being that Apollo is a new client and we were not provided with materiality amounts from the predecessor auditor, we assume that planning materiality is 5% of net income from 2019. A. Anderson Emest Olds A-7 Prepared by: DW Reviewed by: AA Apollo Shoes, Inc. Audit Staffing Memo - A-7 December 31, 2020 Based on the information reviewed in the Apollo Shoes 10-K, minutes of the board of directors, and other documents, I believe that the audit team will require the following specialized expertise: a. Special expertise in Apollo's business and products is probably not necessary. The products are ordinary shoes. The company gave no indication of dealing in complicated transactions such as rubber futures hedging. Auditors with general retail and wholesale experience ought to be able to cope with the expertise demands. b. The audit team will need some special expertise in several areas: (1) the tax personnel probably know how to prepare the state franchise tax return, and that expertise might not be very special, (2) auditors with SEC knowledge and experience will need to participate, and (3) the team will need people with computer expertise on the engagement