Apollo Shoes, Inc. is an audit case designed to introduce you to the entire audit process, from engagement through drafting the appropriate audit report. In order to complete the case, you are asked to assume the role of an in-charge auditor that has worked for three “busy” seasons. This is your firm’s first time auditing Apollo Shoes and it is your first audit client as the primary “in-charge” on the audit engagement team.

While Apollo Shoes’ growth has been phenomenal (there has been a dramatic growth in revenue and net income during the past year), there are some concerns: the client doesn’t want your firm (Anderson, Olds, and Watershed (AOW)) to talk with the predecessor auditor, a labor strike is looming, and one of Apollo Shoes’ largest customers is suffering some financial difficulties.

There is help, from an untrained intern. While the intern can do “fundamental work,” such as gathering audit evidence for you, he appears incapable of preparing audit documentation, making adjusting entries, or even getting acceptable responses from the client. Also, there is assistance on the audit in the form of an objective, competent internal audit staff. Communication between client personnel and other firm members usually takes the form of e-mail messages from the engagement partner (Arnold Anderson), the engagement manager (Darlene Wardlaw), the intern (Timothy Crumpler), and the director of Apollo’s internal audit department (Karina Ramirez). Required assignments and memos are in bold print throughout the case. Page indexing suggestions are given, but feel free to adjust page numbering as you see fit.

While we tried to make the case as realistic as possible, limitations remain. Since you are unable to follow up directly with client personnel, you may need to rely on some evidence with which you may be uncomfortable. In an actual audit, you would be able to inquire, observe, and otherwise follow-up on any questions that you have until you feel comfortable relying on the evidence. To make sure that the case can be completed in a reasonable amount of time, we cut some corners with respect to audit sampling. Understand that audit sampling plays a large role in actual audit practice.

The information is sequential in nature. In other words, pay close attention to information disclosed early in the audit (for example, in the Board of Director’s minutes) as it may play a role in subsequent audit work. Similarly, the bank cutoff statement in the audit documentation for cash and invoices used for valuing inventory may be useful later in the search for unrecorded liabilities and the bank confirmation contains information about long-term liabilities.

Overall, we strongly believe that this case will help you learn by actually completing tasks that would be completed by an auditor. For example, among other skills, an auditor must learn to identify and gather appropriate evidence, create audit documentation and produce an audit trail. Apollo Shoes is the first step in learning these skills.

Finally, while it is difficult for us to believe that not everyone enjoys auditing as much as we do, we have tried to make the case both interesting and even enjoyable (at times). In fact, you can think of the project as a puzzle, in which you have to fill in all the pieces. Alternatively, you could look at the project as a murder mystery that needs a solution. In either case, have fun!