Dear Darlene, Thank you for entrusting me with the task of drafting the Critical Audit Matter (CAM) paragraph for our Apollo Shoes audit. Based on our detailed audit process and findings, I have expanded the CAM paragraph to offer a more comprehensive view, while maintaining simplicity and clarity. Critical Audit Matter Paragraph: Critical Audit Matter: Recognition of Revenue and Receivables from a Bankrupt Customer 1. Detailed Description: During our audit of Apollo Shoes, Inc., we encountered a significant matter concerning the recognition of a $5.8 million sale to a major customer, who had recently declared bankruptcy. Additionally, the company recorded a related account receivable totaling $20 million, which includes the aforementioned sale. The complexity of this issue lies in its potential impact on the financial statements, particularly regarding the accuracy of revenue and receivables figures. This matter necessitated an in-depth evaluation of the likelihood of realizing these revenues and collecting these receivables under the circumstances of the customer's bankruptcy. 2. Reason for Identification as a CAM: This situation was flagged as a CAM due to its direct impact on the financial integrity of Apollo Shoes. The challenge in this scenario was twofold: firstly, in determining the appropriateness of recording such