Factor 1| Apollo operates in the competitive athletic and outdoor footwear industry. 2 Apollo advanced $1.25 million to Larry Lancaster's secretary. 3 5 Apollo believes a major future market for their shoes is in galactic athletic footwear, but advances in space travel must be made for this market to emerge. Apollo does not have adequate documentation supporting customer returns of product. |Apollo has maintained a positive trend in net income over the past several years, and has a strategic emphasis on meeting profitability targets. Apollo has not allowed your firm to speak with the predecessor auditor about their withdrawal after last year's engagement. 7 Apollo has refinanced their short term line of credit into a long term note payable. 8 Apollo incurred $50,000 of charges to repair damages from a Nor'easter storm. 9 Apollo installed a new computer system mid-year. 10 Apollo leases all their properties. 11 12 13 Apollo requires a customer purchase order and credit approval in order to process a sale to a wholesale customer. Apollo suspended all R&D activities as a cost savings measure, and the lab will be converted into a gym for corporate executives. Apollo utilizes sales invoices and shipping documents are pre-numbered, but the sequence is not checked for missing invoices. 14 Apollo's accounting and control manual has not been kept up to date. 15 Apollo's CEO, Larry Lancaster, joined the company a few years ago. 16 Apollo's credit manager reports to the VP of Marketing. Apollo's current products have built in features such as lights and loudspeakers that 17 make the product appropriate for several niche markets such as athletes who like to compete at night, police officers on graveyard shifts and musical groups. 18| Apollo's internal audit director, Karina Ramirez, just joined the company this year. Apollo's IT staff is small and precludes optimal segregation of duties over the information system. 19 20 21 Apollo's sales to employees, COD sales, disposals of property, cash sales and scrap sales are not subject to the same set of controls as credit sales. In the current year Apollo has seen a significant increase in net income despite stagnant sales. 22 Larry Lancaster, Apollo's CEO is quite domineering and dictates accounting issues. Product litigation against Apollo has recently been settled, but Apollo admits no liability. 23 24 Sales are below budget. 25 The internal audit director, Karina Ramirez, reports directly to the audit committee.