Required information In this mon case you will enate andormation related to your client - Apollo Shoes to determine audit risk Instructions Auditors are tasked with gathering a wide variety of information and then determining if it could impact the air presentation of the financial statements in accordance with generally accepted accounting principles. To do this auditors use a framework of risk called the audit risk model On the following tat you will be presented with a set of facts about Apollo, you must decide which part of the audit risk model they fall under inherent risk or control risks if they affect the risk of material misstatement and what impact they have on detection When you are finished with the entire workbook rename this document Audrisk_Firstname_Lastrame and upload it to D2L Mini Cose Audit Risk Mint Case Shoes Factor IR Factor CR Factor Impact on RMM Impact on DR Relevant to Apollo's Financial Statement Audit? Yes Apolo aperts in the competitive athletic and outdoor footwear industry 2.Apollo advanced 51 25 million to carry Lancaster's secretary Apolo believes a major future market for their shoes is in galactic athletic 3. Rootwearbut advances in space travel must be made for this market to Apolo does not have adequate documentation supporting customer returns of product 5 Apolo has maintained a positive trend in net income over the past several years and has a strategic emphasis on meeting profitability targets 6 Apolohan not allowed your firm to speak with the predecessor auditor about the withdrawal fer last year's engagement 7 Apolo has refinanced the short term line of credit into a long term note 8 Apollo incurred 550 000 of charges to repair damages from a Norcooler som 19. Moto installed a new comes to mid voor paya Prey 1 of 3 !!! Noxt > 9. Apollo installed a new computer system mid-year 10 Apollo leases all their properties 11 Apolo requires a customer purchase order and credit approval in order to process a sale to a wholesale customer 12 Apollo suspended al 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 13 but the sequence is not checked for missing invoices 14 Apolo's accounting and control manual has not been kept up to date 15 Apollo's CEO, Larry Lancaster, Just 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 17 loudspeakers that 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 Apolos internal audit director Karina Ramirez, just joined the company this yo 19 Apollo's IT staff is small and precludes optimal segregation of duties over the information system 20 Apolo'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 21 In the current year Apollo has seen a significant increase in net income despite stagnant sales Larry Lancaster, Apollo's new CEO is quite domineering and dictates 22 accounting 23 Product litigation against Apollo has recently been settled but Apollo admits no liability 24 Sales are below budget 25 The internal audit director Karina Ramirez, reports directly to the audit committee ase. Analytical Review Required information In this mini-case you will perform the Preliminary Analytical Procedures required as part of audit planning For ease your audit manager has already organized the workpapers and completed the planning materiality worksheet Instructions: Read the planning materiality memo from your team member Taylor Crump, then read the steps in the audit program found on Work Paper 3-0 and familiare yourself with work paper B-1 Complete all the steps on the audit program Be sure to document your work using the designated tick marks. The tick mark tegend located at the bottom of each work paper When you are finished with the PAP workpaper enter your vitals in the box in the top right marked prepared by This entire completed workbook should be renamed as PreAPrstname Lastname and uploaded to the D21 dropbox Mini Cose Audit Primary Analytical Prodedures Minare List the calculated percentage change for each of the following accounts (Negative amounts should be indicated by a minus sign) 17000 - Acumulated Depreciation S0010 - Cost of Goods Sold 66000 Legal and Professional Expense RA IN Dron Next > of 3 Required information In this mini-case you will perform the Preliminary Analytical Procedures required as part of audit planning. For ease your audit manager has already organized the workpapers and completed the planning materiality worksheet. Instructions: Read the planning materiality memo from your team member (Taylor Crump), then read the steps in the audit program found on Work Paper B-O and familiarize yourself with work paper B-1 Complete all the steps on the audit program Be sure to document your work using the designated tick marks. The tick mark legend is located at the bottom of each work paper. When you are finished with the PAP workpaper, enter your initials in the box in the top right marked "Prepared By This entire completed workbook should be renamed as PreAP_Firstname_Lastname and uploaded to the D2L dropbox Mini Case Audit Preliminary Analytical Prodedures Mini Case Rights managed content: Apollo Shoes (text) Excel Apollo Preliminary Analytical Procedures Audit Mini Case - View-only Search (Alto File Home Insert Draw Page Layout Data Review Help Formulas DEN View Viewing 2012 General Times New Ro B 4 A10 12 Apollo Preliminary Analytical Procedures Audit Mini-Case In this mini-case you will perform the Preliminary Analytical Procedures required as part of audit planning. For ease your audit manager has 3 already organized the workpapers and completed the planning materiality worksheet Instructions: Read the planning materiality memo from your team member Taylor Crump), then read the steps in the midit progran found on Work Paper B-0 and familiarize yourself with work paper B-1. Complete all the steps on the audit program. Be sure to document your work s using the designated tick marks. The tick mark legend is located at the bottom of each work paper 4 6 7 8 When you are finished with the PAP workpaper, enter your initials in the box in the top right marked "Prepared By" This entire completed workbook should be renamed as PROAP Firstname Lastname and upload 10 11 12 A-2 PBC 2020 Trial Balance A-5 Materiality Memo A 1 PBC 2019 Trial Balance > Instructions B-0 Audit Program Workbook Statistics Type here to search o BE A1 v fx D E F B-0 1 2 B Apollo Shoes, Inc AUDIT PLAN-Preliminary Analytical Procedures EYE 103 1020 Workpaper Reference Complete engagement materiality memo. A-S Related Assertion 16 Performed Comments by Please comment on whether you think TC materiality seems reasonable and 1 Obtain 2019 audited trial balance and 2020 unaudited trial balance. Create Preliminary Analytical Procedures (PreAP) workpaper that calculates absolute and percentage change over the prior year for each line item Cross reference all balances on PAP workpaper to TB and foot amounts 2 3 Investigate any percentage change 2 10% or over Planning Materiality (see A-5). You will select only three changes to investigate (see step 5). However, this step would be completed in a normal audit $ Select three important changes noted on the PreAP, and include them on the deliverable for your senior to review. For each change, specify two $ hypotheses that could be driving each change. 10 A1 fx Apollo Shoes, Inc Trial Balance (Audited) 31-Dec-19 PBC A. 4 5 6 7 8 9 10 11 12 13 Debit $1.987 28 $198.116.52 $0.00 $3,044,958.13 $16,410,902.71 15 16 17 18 19 20 21 22 23 14 5 6 Account ID Account Description 10100 Cash on Hand 10200 Regular Checking Account 10300 Payroll Checking Account 10400 Savings Account 11000 Accounts Receivable 11500 Allowance for Doubtful Acco 12000 Inventory - Spotlight 12300 Reserve for Inventory Obsolet 14100 Prepaid Insurance 14200 Prepaid Rent 14300 Office Supplies 14400 Notes Receivable-Current 14700 Other Current Assets 15000 Land 15100 Buildings and Land Improve 15200 Machinery, Equipment, Office 17000 Accum. Depreciation 19000 Investments 19900 Other Noncurrent Assets 20000 Accounts Payable 23100 Sales Tax Payable 220 Dunia $18,825,205,24 0 $743,314,38 $200,000.00 $7,406,82 0 0 $117,000.00 $623.905.92 $433.217.10 0 $572,691.08 $53,840.59 0 0 Credit 0 0 0 0 0 $1,262,819.88 0 $3,012,000.00 0 0 0 0 0 0 0 0 $164,000.00 0 0 $4,633,118.09 $0.00 ( Instructions B-O Audit Program A-1 PBC 2019 Trial Balance 0 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 45 47 49 49 50 51 52 23 TOUT Sales Tax Payable 0 23200 Wages Payable 0 23300 FICA Employee Withholding 0 23350 Medicare Withholding 0 23400 Federal Payroll Taxes Payable 0 23500 FUTA Tax Payable 0 23600 State Payroll Taxes Payable 0 23700 SUTA Tax Payable 0 23800 FICA Employer Withholding 23900 Medicare Emplover Withhold 0 24100 Line of Credit 0 24200 Current Portion Long-Term D 0 24700 Other Current Liabilities 0 27000 Notes Payable-Noncurrent 39003 Common Stock 39004 Paid in Capital 39005 Retained Earnings 40000 Sales 0 41000 Sales Returns $4,497.583.20 42000 Warranty Expense $1,100,281.48 45000 Income from Investments 0 46000 Interest Income 0 47000 Miscellaneous Income 0 50010 Cost of Goods Sold $141,569,221.61 57500 Freight $4,302,951.46 60000 Advertising Expense $897,140.01 61000 Auto Expenses $208.974.39 OOOO $0.00 $29,470.32 $1,318.69 $583.99 $6,033.01 0 $2.815.47 0 $1,318.69 $583.99 $10,000,000.00 0 0 0 $8,105,000.00 $7,423,000.00 $2,219,120.65 $246,172,918.44 0 0 $0.00 $204,302.81 $0.00 0 0 0 0 = Instructions B-Audit Program A-1 PBC 2019 Trial Balance A-2 PBC E F U 0 0 0 0 0 0 00000 Advertising Expense. $897.140.01 61000 Auto Expenses $208,974.39 62000 Research and Development $31,212,334.17 64000 Depreciation Expense $133,000.00 64500 Warehouse Salaries $4,633,383.82 65000 Property Tax Expense $80,495.32 66000 Legal and Professional Expen: $3,605,133.96 67000 Bad Debt Expense $1,622,425.99 68000 Insurance Expense $853,942.65 70000 Maintenance Expense $61,136.04 70100 Utilities $135.642.99 70110 Phone $76,373.78 70120 Postal $128,033.21 71000 Miscellaneous Office Expense $17,023.27 72000 Payroll Tax Exp $1,550,989.06 73000 Pension Profit-Sharing Plan E $3,000,000.00 74000 Rent or Lease Expense $2,603,485.87 77500 Administrative Wages Expens $16,875,305.98 78000 Interest Expense $875,000.00 78500 Income Tax Expense - Federal $2,365,000.00 78510 Income Tax Expense - State $429,000.00 80000 Loss on Legal Settlement $19,172,000.00 $283,238,404.03 0 0 0 0 0 0 0 0 0 0 0 0 0 $283,238,404.03 Times New Ro 12 D G H c PBC A-2 Credit Amt A B 1 Apollo Shoes, Inc 2 Preclosing Trial Balance 3 31-Dec-20 4 5 Account ID Account Description 10100 Cash on Hand 10200 Regular Checking Account 10300 Payroll Checking Account 10400 Savings Account 10 11000 Accounts Receivable 11 11400 Other Receivables 12 11500 Allowance for Doubtful Accounts 13 12000 Inventory -NDEN S S Debit Amt 2,275.23 557,125.92 $3,645.599.15 $1.250,000.00 S1.239.009.75 B-1 Prel A-2 PBC 2020 Trial Balance A-5 Materiality Memo > Instructions B-O Audit Program A-1 PBC 2019 Trial Balance H D 846,000.00 S 74 15 16 17 18 19 20 21 22 23 24 25 26 A B C 12300 Reserve for Inventory Obsolescence 14100 Prepaid Insurance $3,424,213.78 14200 Prepaid Rent 14300 Office Supplies S 8.540.00 14400 Notes Receivable-Current 14700 Other Current Assets 15000 Land S 117,000.00 15100 Buildings and Land Improvements 674.313.92 15200 Machinery Equipment, Office Furni $2,929,097.13 17000 Accum. Depreciation 19000 Investments S1998,780.39 19900 Other Noncurrent Assets S 53.840.59 20000 Accounts Payable S 610,000.00 $1.922,095.91 B. 1 Prel A 5 MaterialityMomo A-2 PBC 2020 Trial Balance A-1 PBC 2019 Trial Balance Instructions B-0 Audit Program E B C D E S S 8,439.65 11,414.99 118,086.12 23100 Sales Tax Payable 23200 Wages Payable 23300 FICA Employee Withholding 23350 Medicare Withholding 23400 Federal Payroll Taxes Payable 23500 FUTA Tax Payable 23600 State Payroll Taxes Payable 23700 SUTA Tax Payable 23800 FICA Employer Withholding 23900 Medicare Employer Withholding 24100 Line of Credit 24200 Current Portion Long-Term Debt 24700 Other Current Liabilities S 27 28 29 30 31 32 33 34 35 36 37 38 9 55,106.86 + $ $ 8.439.65 11.414.99 Instructions B-0 Audit Program A-1 PBC 2019 Trial Balance A-2 PBC 2020 Trial Balance Workbook Statistics O Tuna bara tacearch O B D 40 41 42 43 44 S8,105,000.00 $7,423,000.00 $6,590.483.64 45 $1,158,128.47 46 47 48 49 50 51 27000 Notes Payable-Noncurrent 39003 Common Stock 39004 Paid-in Capital 39005 Retained Earnings 40000 Sales 41000 Sales Returns 42000 Warranty Expense 45000 Income from Investments 46000 Interest Income 47000 Miscellaneous Income 50010 Cost of Goods Sold 57500 Freight 60000 Advertising Expense 61000 Auto Expenses $1,426,089.31 S 131,881.46 $2,166,000.00 $4,240,263.09 $1,036,854.01 $ 210.502.80 52 53 CADO Onn A-2 PBC 2020 Trial Balance > A-1 PBC 2019 Trial Balance = Instructions B-O Audit Program Warhank Statistics G D S 528,870.44 S 446,000.00 $4.720.715.56 S 99,33245 $4.913,224.45 54 55 56 57 58 59 60 61 62 63 64 A 62000 Research and Development 64000 Depreciation Expense 64500 Warehouse Salaries 65000 Property Tax Expense 66000 Legal and Professional Expense 67000 Bad Debt Expense 68000 Insurance Expense 70000 Maintenance Expense 70100 Utilities 70110 Phone 70120 Postal 71000 Miscellaneous Office Expense 72000 Payroll Tax Exp 73000 Pension Profit Sharing Plan Ex 70600 Content Planning Acou S 36,106.92 S 35.502.87 S 137,332.18 S 52,599.02 S 77.803,61 S 24,891.82 $1,577.811.85 $3,630,375.80 > 65 66 67 220 2750 A S Materiality A-2 PBC 2020 Trial Balance A-1 PBC 2019 Trial Balance $3,630,375.80 S 330,375.80 $1,206,574.00 73000 Pension Profit-Sharing Plan Ex 78600 Controllers' Clearning Account 74000 Rent or Lease Expense 77500 Administrative Wages Expense 78000 Interest Expense 78500 Income Tax Expense - Federal 78510 Income Tax Expense - State $2,591,736.50 $8,900,000.00 $3,100,000.00 File Home Home Review View Help Viewing Insert Draw Page Layout Formulas Data Times New Ro 12 BA General B E D Apollo Shoes ENGAGEMENT MATERIALITY (Required for all engagements) Apollo Shoes December 31, 2020 F GH A-5 Prod by TC Reviewed by AA 1 2 3 4 5 6 7 CLIENT PERIOD ENDED) This completed form must be provided to the engagement quality control reviewer in the planning stage of every audit, B 9 PLANNING MATERIALITY CALCULATION 10 11 Only if the current year net income (osa) (or other measure) is significantly different from the entity historical results would 2 year averaging to obtain normalized art income (los) Cor other measure) be A-5 Materiality Memo B-1 Prelim Analytical Proce A-2 PBC 2020 Trial Balance = t Program A-1 PBC 2019 Trial Balance Workbook Statistics O BI Ez Type here to search B D PLANNING MATERIALITY CALCULATION 10 11 12 13 14 Only if the current year net income (loss) (or other measure) is significantly different from the entity historical results would 2-year averaging to obtain normalized net income (los) (or other measure) be appropriate PROFIT ORIENTED ENTITIES Current Your Prior Year Net income (los) 50,549 082 12,360 Plus (minus) unusual non-recurring revenues and expenses, and extraordinary items ADJUSTED NET INCOME (LOSS) 50 549.082 4371163 Adjusted net income (lous) multiplied by + 2.522 454 212568 15 16 17 18 19 20 21 22 23 390 Current Year 131 205 564 36,793726 TOTAL ASSETS A-2 PBC 2020 Trial Balance A-5 Materiality Memo = t Program A-1 PBC 2019 Trial Balance Workbook Statistics Type here to search O Excel Apollo Preliminary Analytical Procedures Audit Mini Case - View-only Search (Alto) File Home Insert Draw Page Layout Formulas Data Review View Help 6 Viewing General Times New Ro BAYO A E7 G H 8 D 22 Current Your 23 TOTAL ASSETS 131205564 16,793726 24 25 Total multiplied by 26 19 18.000 165.000 27 28 Caree Year 29 TOTAL REVENUES 2141625135 30 Plus hocu reves 31 ADJUSTED REVENUES 41.625, 21524 32 33 Total adjusted veltipli by 34 162 35 36 37 JUSTIFICATION OF PLANNING MATERIALITY 38 1. Financial data source (e. actual, budget Year end this balance actual di tandone A-2 PBC 2020 Trial Balance A-5 Materiality Memo B-1 Prelim Analytical Proced Et Program A-1 PBC 2019 Trial Balance Workbook Statistics Type here to search O BE E7 fi 8 D G H 36 37 38 JUSTIFICATION OF PLANNING MATERIALITY Year und trial balancunctual data obtained from client 1. Financial data source (ie, actual, budget, projection) 39 40 2. Basis (i.c. normalized net income, revenue, Adjusted net income total assets, other) Justification: Based on prior experience with the client we conclude that adjusted net income is an appropriate base for planning materiality 41 42 43 44 45 46 Standard und 3. Peroentage of financial data source used: 47 48 49 50 4. Amount selected (planning materiality) 2.527/454 B-1 Pr A-5 Materiality Memo A2 PBC 2020 Trial Balance = t Program A-1 PBC 2019 Trial Balance Workbook Statistics 72 0 Type here to search D Question Apoki Cart Download file Apiolo Pary When A CHY o https://www.officeapps.live.com/op/view.aspx?tric Amarelo di media where alon.com We've opened your file for quick and easy viewing right in Microsoft Edgo. Choose Download the W you want to use it later Apollo Preliminary Analytical Procedures Audit Mini CaseView.only Draw Page Layout Formulas View Help 6 Viewing Times New R 12 BA Search Alt Excel Data Review File Home Insert D 50 2X 4 Amending) 52 58 5. Prior your family 6. Prematy/Tolerable moment of planning materiality) 19.01 35 7. Listiny prebold for med) (sing to 10% of planning materially based on expected level of adjustment is may appropriate 59 1373 56 57 58 59 0 A-5 Materiality Memo B-1 Prelim Analytical Procedure A-2 PBC 2020 Trial Balance > Program A-1 PBC 2019 Trial Balance Workbook Statistics Type here to search 22 O 9 7 2 Engagement Partner A Anderson Engagement Quality Control Reviewer Ernest Olda 1 Reserve for inventory Obsolescence O H T -1 Prepared by Rewww.by 3 5 Unaudited 2000 Raw | HAI L Teror Change (United) (CYPY (Raw Change 7 8 9 10 11 12 13 14 5 6 Apollo Shoes, Inc Preliminary Analytical Procedures Audited 2019 Account ID Account Description (Audited) 10100 Cash on Hand 10200 Regular Checking Account 10300 Payroll Checking Account 10100 Savings Account 11000 Accounts Receivable 11400 Other Receivables 11500 Allowance for Doubtful Accounts 12000 Inventory 12.300 Reserve for laventory Obsolescence 14100 Prepaid Insurance E B-1 Prelim Analytical Procedure D E G H 25 B16 Reserve for Inventory Obsolescence A B 18 14200 Prepaid Rent 19 144300 Office Supplies 20 14400 Notes Receivable-Current 21 14700 Other Current Assets 22 15000 Land 23 15100 Buildings and Land Improvements 24 15200 Machinery, Equipment Office Furniture 1 7000 Accum. Depreciation 26 19000 Investments 27 19900 Other Noncurrent Assets 28 20000 Accounts Payable 29 23100 Sales Tax Payable 30 23200 Wages Payable 31 23300 FICA Employee Withholding 32 23350 Medicare Withholding 33 23400 Federal Payroll Taxes Payable 34 23500 FUTA Tax Payable 35 23600 State Payroll Taxes Payable D F G H 36 37 33 39 30 41 12 41 44 15 16 -17 18 19 A B 33700 SUTA TRX Payable 23800 FICA Employer Withholding 23900 Medicare Employer Withholding 34100 Line of Credit 24700 Current Portion Long-Teem Debt 24700 Other Cureat Lahilities 27000 Notes Payable Noocurre 39003 Como Stock 39005 Pald-in Capital 19005 Retained Earnings 10000 Sales 41000 Sales Return 42000 Wireary Expense 45000 Income from Investments 46000 Interest Income 47000 Miscellaneous Income 30010 Cost of Goods Sold 57500 Freight -3 E 51 53 A-5 MaterialityMemo B-1 Prelim Analytical Procedure - Program A-2 PBC 2020 Trial Balance A-1 PBC 2019 Trial Balance Workbook Statistics v Times New RO 12 Goneral BIG D G H 54 SS 56 57 58 59 60 61 62 E Reserve for Inventory Obsolescence B 60000 Advertising Expense 61000 Auto Expenses 62000 Research and Development 64000 Depreciation Expense 64500 Warehouse Salaries 65000 Property Tax Expense 66000 Legal and Professional Expense 67000 Bad Debt Expense 68000 Insurance Expense 70000 Maintenance Expense 70100 Utilities 70110 Phone 70120 Postal 71000 Miscellaneous Office Expense 72000 Payroll Tax Exp 73000 Pension Profit Sharing Plan Ex 78600 Controllers Clearning Account 74000 Rent or Lease Expense 4 64 65 66 67 68 69 70 71 A-5 Materiality Memo B-1 Prelim Analytical Pr 22 o search Apollo Mini-Cose - Analytical Review Sot Help 1 50 poems Required information W CONTROL 13 Apologies invoices and shipping documents are presumbered but the second is not checked for missing invoices 14 Apoio accounting and control man has not been Rootlodete 15 Apolos CFO, Lars just joined the company fow yours ago 16 Apolo's credit manager reports to the VP of Marketing Apolo's current products have built in features such asights and 17 loudspeakers that make the product proprint for several niche markets such as eles who like to compete at night police officers on graveyard shifts and musical groups in Apolo's omial sud decor, Karina Ranwez just joined the company this ya 19 Apollo i stalls small and produdes oli segregation of des ver the formation system Apolo's sales to employees, C00 sales, disposals of property cash sales and casos are not subot lo the same set of controls as credit soos 21 in the current year Apollo has soon a significant increase in not income despite strant les Larry Lancaster, Apollo's new CEOs que domineering and dictis 22 Bacing issues Production against Apolo has recently been setsed, but Apollo admits no liability 24 Saare below budget 25 The nemala Grecto Kanna Romet, riports directly to the audit comme MC Graw Hill Proy 1 of 3 III Next > Type here to search O BI B 77F Required information In this mon case you will enate andormation related to your client - Apollo Shoes to determine audit risk Instructions Auditors are tasked with gathering a wide variety of information and then determining if it could impact the air presentation of the financial statements in accordance with generally accepted accounting principles. To do this auditors use a framework of risk called the audit risk model On the following tat you will be presented with a set of facts about Apollo, you must decide which part of the audit risk model they fall under inherent risk or control risks if they affect the risk of material misstatement and what impact they have on detection When you are finished with the entire workbook rename this document Audrisk_Firstname_Lastrame and upload it to D2L Mini Cose Audit Risk Mint Case Shoes Factor IR Factor CR Factor Impact on RMM Impact on DR Relevant to Apollo's Financial Statement Audit? Yes Apolo aperts in the competitive athletic and outdoor footwear industry 2.Apollo advanced 51 25 million to carry Lancaster's secretary Apolo believes a major future market for their shoes is in galactic athletic 3. Rootwearbut advances in space travel must be made for this market to Apolo does not have adequate documentation supporting customer returns of product 5 Apolo has maintained a positive trend in net income over the past several years and has a strategic emphasis on meeting profitability targets 6 Apolohan not allowed your firm to speak with the predecessor auditor about the withdrawal fer last year's engagement 7 Apolo has refinanced the short term line of credit into a long term note 8 Apollo incurred 550 000 of charges to repair damages from a Norcooler som 19. Moto installed a new comes to mid voor paya Prey 1 of 3 !!! Noxt > 9. Apollo installed a new computer system mid-year 10 Apollo leases all their properties 11 Apolo requires a customer purchase order and credit approval in order to process a sale to a wholesale customer 12 Apollo suspended al 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 13 but the sequence is not checked for missing invoices 14 Apolo's accounting and control manual has not been kept up to date 15 Apollo's CEO, Larry Lancaster, Just 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 17 loudspeakers that 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 Apolos internal audit director Karina Ramirez, just joined the company this yo 19 Apollo's IT staff is small and precludes optimal segregation of duties over the information system 20 Apolo'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 21 In the current year Apollo has seen a significant increase in net income despite stagnant sales Larry Lancaster, Apollo's new CEO is quite domineering and dictates 22 accounting 23 Product litigation against Apollo has recently been settled but Apollo admits no liability 24 Sales are below budget 25 The internal audit director Karina Ramirez, reports directly to the audit committee ase. Analytical Review Required information In this mini-case you will perform the Preliminary Analytical Procedures required as part of audit planning For ease your audit manager has already organized the workpapers and completed the planning materiality worksheet Instructions: Read the planning materiality memo from your team member Taylor Crump, then read the steps in the audit program found on Work Paper 3-0 and familiare yourself with work paper B-1 Complete all the steps on the audit program Be sure to document your work using the designated tick marks. The tick mark tegend located at the bottom of each work paper When you are finished with the PAP workpaper enter your vitals in the box in the top right marked prepared by This entire completed workbook should be renamed as PreAPrstname Lastname and uploaded to the D21 dropbox Mini Cose Audit Primary Analytical Prodedures Minare List the calculated percentage change for each of the following accounts (Negative amounts should be indicated by a minus sign) 17000 - Acumulated Depreciation S0010 - Cost of Goods Sold 66000 Legal and Professional Expense RA IN Dron Next > of 3 Required information In this mini-case you will perform the Preliminary Analytical Procedures required as part of audit planning. For ease your audit manager has already organized the workpapers and completed the planning materiality worksheet. Instructions: Read the planning materiality memo from your team member (Taylor Crump), then read the steps in the audit program found on Work Paper B-O and familiarize yourself with work paper B-1 Complete all the steps on the audit program Be sure to document your work using the designated tick marks. The tick mark legend is located at the bottom of each work paper. When you are finished with the PAP workpaper, enter your initials in the box in the top right marked "Prepared By This entire completed workbook should be renamed as PreAP_Firstname_Lastname and uploaded to the D2L dropbox Mini Case Audit Preliminary Analytical Prodedures Mini Case Rights managed content: Apollo Shoes (text) Excel Apollo Preliminary Analytical Procedures Audit Mini Case - View-only Search (Alto File Home Insert Draw Page Layout Data Review Help Formulas DEN View Viewing 2012 General Times New Ro B 4 A10 12 Apollo Preliminary Analytical Procedures Audit Mini-Case In this mini-case you will perform the Preliminary Analytical Procedures required as part of audit planning. For ease your audit manager has 3 already organized the workpapers and completed the planning materiality worksheet Instructions: Read the planning materiality memo from your team member Taylor Crump), then read the steps in the midit progran found on Work Paper B-0 and familiarize yourself with work paper B-1. Complete all the steps on the audit program. Be sure to document your work s using the designated tick marks. The tick mark legend is located at the bottom of each work paper 4 6 7 8 When you are finished with the PAP workpaper, enter your initials in the box in the top right marked "Prepared By" This entire completed workbook should be renamed as PROAP Firstname Lastname and upload 10 11 12 A-2 PBC 2020 Trial Balance A-5 Materiality Memo A 1 PBC 2019 Trial Balance > Instructions B-0 Audit Program Workbook Statistics Type here to search o BE A1 v fx D E F B-0 1 2 B Apollo Shoes, Inc AUDIT PLAN-Preliminary Analytical Procedures EYE 103 1020 Workpaper Reference Complete engagement materiality memo. A-S Related Assertion 16 Performed Comments by Please comment on whether you think TC materiality seems reasonable and 1 Obtain 2019 audited trial balance and 2020 unaudited trial balance. Create Preliminary Analytical Procedures (PreAP) workpaper that calculates absolute and percentage change over the prior year for each line item Cross reference all balances on PAP workpaper to TB and foot amounts 2 3 Investigate any percentage change 2 10% or over Planning Materiality (see A-5). You will select only three changes to investigate (see step 5). However, this step would be completed in a normal audit $ Select three important changes noted on the PreAP, and include them on the deliverable for your senior to review. For each change, specify two $ hypotheses that could be driving each change. 10 A1 fx Apollo Shoes, Inc Trial Balance (Audited) 31-Dec-19 PBC A. 4 5 6 7 8 9 10 11 12 13 Debit $1.987 28 $198.116.52 $0.00 $3,044,958.13 $16,410,902.71 15 16 17 18 19 20 21 22 23 14 5 6 Account ID Account Description 10100 Cash on Hand 10200 Regular Checking Account 10300 Payroll Checking Account 10400 Savings Account 11000 Accounts Receivable 11500 Allowance for Doubtful Acco 12000 Inventory - Spotlight 12300 Reserve for Inventory Obsolet 14100 Prepaid Insurance 14200 Prepaid Rent 14300 Office Supplies 14400 Notes Receivable-Current 14700 Other Current Assets 15000 Land 15100 Buildings and Land Improve 15200 Machinery, Equipment, Office 17000 Accum. Depreciation 19000 Investments 19900 Other Noncurrent Assets 20000 Accounts Payable 23100 Sales Tax Payable 220 Dunia $18,825,205,24 0 $743,314,38 $200,000.00 $7,406,82 0 0 $117,000.00 $623.905.92 $433.217.10 0 $572,691.08 $53,840.59 0 0 Credit 0 0 0 0 0 $1,262,819.88 0 $3,012,000.00 0 0 0 0 0 0 0 0 $164,000.00 0 0 $4,633,118.09 $0.00 ( Instructions B-O Audit Program A-1 PBC 2019 Trial Balance 0 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 45 47 49 49 50 51 52 23 TOUT Sales Tax Payable 0 23200 Wages Payable 0 23300 FICA Employee Withholding 0 23350 Medicare Withholding 0 23400 Federal Payroll Taxes Payable 0 23500 FUTA Tax Payable 0 23600 State Payroll Taxes Payable 0 23700 SUTA Tax Payable 0 23800 FICA Employer Withholding 23900 Medicare Emplover Withhold 0 24100 Line of Credit 0 24200 Current Portion Long-Term D 0 24700 Other Current Liabilities 0 27000 Notes Payable-Noncurrent 39003 Common Stock 39004 Paid in Capital 39005 Retained Earnings 40000 Sales 0 41000 Sales Returns $4,497.583.20 42000 Warranty Expense $1,100,281.48 45000 Income from Investments 0 46000 Interest Income 0 47000 Miscellaneous Income 0 50010 Cost of Goods Sold $141,569,221.61 57500 Freight $4,302,951.46 60000 Advertising Expense $897,140.01 61000 Auto Expenses $208.974.39 OOOO $0.00 $29,470.32 $1,318.69 $583.99 $6,033.01 0 $2.815.47 0 $1,318.69 $583.99 $10,000,000.00 0 0 0 $8,105,000.00 $7,423,000.00 $2,219,120.65 $246,172,918.44 0 0 $0.00 $204,302.81 $0.00 0 0 0 0 = Instructions B-Audit Program A-1 PBC 2019 Trial Balance A-2 PBC E F U 0 0 0 0 0 0 00000 Advertising Expense. $897.140.01 61000 Auto Expenses $208,974.39 62000 Research and Development $31,212,334.17 64000 Depreciation Expense $133,000.00 64500 Warehouse Salaries $4,633,383.82 65000 Property Tax Expense $80,495.32 66000 Legal and Professional Expen: $3,605,133.96 67000 Bad Debt Expense $1,622,425.99 68000 Insurance Expense $853,942.65 70000 Maintenance Expense $61,136.04 70100 Utilities $135.642.99 70110 Phone $76,373.78 70120 Postal $128,033.21 71000 Miscellaneous Office Expense $17,023.27 72000 Payroll Tax Exp $1,550,989.06 73000 Pension Profit-Sharing Plan E $3,000,000.00 74000 Rent or Lease Expense $2,603,485.87 77500 Administrative Wages Expens $16,875,305.98 78000 Interest Expense $875,000.00 78500 Income Tax Expense - Federal $2,365,000.00 78510 Income Tax Expense - State $429,000.00 80000 Loss on Legal Settlement $19,172,000.00 $283,238,404.03 0 0 0 0 0 0 0 0 0 0 0 0 0 $283,238,404.03 Times New Ro 12 D G H c PBC A-2 Credit Amt A B 1 Apollo Shoes, Inc 2 Preclosing Trial Balance 3 31-Dec-20 4 5 Account ID Account Description 10100 Cash on Hand 10200 Regular Checking Account 10300 Payroll Checking Account 10400 Savings Account 10 11000 Accounts Receivable 11 11400 Other Receivables 12 11500 Allowance for Doubtful Accounts 13 12000 Inventory -NDEN S S Debit Amt 2,275.23 557,125.92 $3,645.599.15 $1.250,000.00 S1.239.009.75 B-1 Prel A-2 PBC 2020 Trial Balance A-5 Materiality Memo > Instructions B-O Audit Program A-1 PBC 2019 Trial Balance H D 846,000.00 S 74 15 16 17 18 19 20 21 22 23 24 25 26 A B C 12300 Reserve for Inventory Obsolescence 14100 Prepaid Insurance $3,424,213.78 14200 Prepaid Rent 14300 Office Supplies S 8.540.00 14400 Notes Receivable-Current 14700 Other Current Assets 15000 Land S 117,000.00 15100 Buildings and Land Improvements 674.313.92 15200 Machinery Equipment, Office Furni $2,929,097.13 17000 Accum. Depreciation 19000 Investments S1998,780.39 19900 Other Noncurrent Assets S 53.840.59 20000 Accounts Payable S 610,000.00 $1.922,095.91 B. 1 Prel A 5 MaterialityMomo A-2 PBC 2020 Trial Balance A-1 PBC 2019 Trial Balance Instructions B-0 Audit Program E B C D E S S 8,439.65 11,414.99 118,086.12 23100 Sales Tax Payable 23200 Wages Payable 23300 FICA Employee Withholding 23350 Medicare Withholding 23400 Federal Payroll Taxes Payable 23500 FUTA Tax Payable 23600 State Payroll Taxes Payable 23700 SUTA Tax Payable 23800 FICA Employer Withholding 23900 Medicare Employer Withholding 24100 Line of Credit 24200 Current Portion Long-Term Debt 24700 Other Current Liabilities S 27 28 29 30 31 32 33 34 35 36 37 38 9 55,106.86 + $ $ 8.439.65 11.414.99 Instructions B-0 Audit Program A-1 PBC 2019 Trial Balance A-2 PBC 2020 Trial Balance Workbook Statistics O Tuna bara tacearch O B D 40 41 42 43 44 S8,105,000.00 $7,423,000.00 $6,590.483.64 45 $1,158,128.47 46 47 48 49 50 51 27000 Notes Payable-Noncurrent 39003 Common Stock 39004 Paid-in Capital 39005 Retained Earnings 40000 Sales 41000 Sales Returns 42000 Warranty Expense 45000 Income from Investments 46000 Interest Income 47000 Miscellaneous Income 50010 Cost of Goods Sold 57500 Freight 60000 Advertising Expense 61000 Auto Expenses $1,426,089.31 S 131,881.46 $2,166,000.00 $4,240,263.09 $1,036,854.01 $ 210.502.80 52 53 CADO Onn A-2 PBC 2020 Trial Balance > A-1 PBC 2019 Trial Balance = Instructions B-O Audit Program Warhank Statistics G D S 528,870.44 S 446,000.00 $4.720.715.56 S 99,33245 $4.913,224.45 54 55 56 57 58 59 60 61 62 63 64 A 62000 Research and Development 64000 Depreciation Expense 64500 Warehouse Salaries 65000 Property Tax Expense 66000 Legal and Professional Expense 67000 Bad Debt Expense 68000 Insurance Expense 70000 Maintenance Expense 70100 Utilities 70110 Phone 70120 Postal 71000 Miscellaneous Office Expense 72000 Payroll Tax Exp 73000 Pension Profit Sharing Plan Ex 70600 Content Planning Acou S 36,106.92 S 35.502.87 S 137,332.18 S 52,599.02 S 77.803,61 S 24,891.82 $1,577.811.85 $3,630,375.80 > 65 66 67 220 2750 A S Materiality A-2 PBC 2020 Trial Balance A-1 PBC 2019 Trial Balance $3,630,375.80 S 330,375.80 $1,206,574.00 73000 Pension Profit-Sharing Plan Ex 78600 Controllers' Clearning Account 74000 Rent or Lease Expense 77500 Administrative Wages Expense 78000 Interest Expense 78500 Income Tax Expense - Federal 78510 Income Tax Expense - State $2,591,736.50 $8,900,000.00 $3,100,000.00 File Home Home Review View Help Viewing Insert Draw Page Layout Formulas Data Times New Ro 12 BA General B E D Apollo Shoes ENGAGEMENT MATERIALITY (Required for all engagements) Apollo Shoes December 31, 2020 F GH A-5 Prod by TC Reviewed by AA 1 2 3 4 5 6 7 CLIENT PERIOD ENDED) This completed form must be provided to the engagement quality control reviewer in the planning stage of every audit, B 9 PLANNING MATERIALITY CALCULATION 10 11 Only if the current year net income (osa) (or other measure) is significantly different from the entity historical results would 2 year averaging to obtain normalized art income (los) Cor other measure) be A-5 Materiality Memo B-1 Prelim Analytical Proce A-2 PBC 2020 Trial Balance = t Program A-1 PBC 2019 Trial Balance Workbook Statistics O BI Ez Type here to search B D PLANNING MATERIALITY CALCULATION 10 11 12 13 14 Only if the current year net income (loss) (or other measure) is significantly different from the entity historical results would 2-year averaging to obtain normalized net income (los) (or other measure) be appropriate PROFIT ORIENTED ENTITIES Current Your Prior Year Net income (los) 50,549 082 12,360 Plus (minus) unusual non-recurring revenues and expenses, and extraordinary items ADJUSTED NET INCOME (LOSS) 50 549.082 4371163 Adjusted net income (lous) multiplied by + 2.522 454 212568 15 16 17 18 19 20 21 22 23 390 Current Year 131 205 564 36,793726 TOTAL ASSETS A-2 PBC 2020 Trial Balance A-5 Materiality Memo = t Program A-1 PBC 2019 Trial Balance Workbook Statistics Type here to search O Excel Apollo Preliminary Analytical Procedures Audit Mini Case - View-only Search (Alto) File Home Insert Draw Page Layout Formulas Data Review View Help 6 Viewing General Times New Ro BAYO A E7 G H 8 D 22 Current Your 23 TOTAL ASSETS 131205564 16,793726 24 25 Total multiplied by 26 19 18.000 165.000 27 28 Caree Year 29 TOTAL REVENUES 2141625135 30 Plus hocu reves 31 ADJUSTED REVENUES 41.625, 21524 32 33 Total adjusted veltipli by 34 162 35 36 37 JUSTIFICATION OF PLANNING MATERIALITY 38 1. Financial data source (e. actual, budget Year end this balance actual di tandone A-2 PBC 2020 Trial Balance A-5 Materiality Memo B-1 Prelim Analytical Proced Et Program A-1 PBC 2019 Trial Balance Workbook Statistics Type here to search O BE E7 fi 8 D G H 36 37 38 JUSTIFICATION OF PLANNING MATERIALITY Year und trial balancunctual data obtained from client 1. Financial data source (ie, actual, budget, projection) 39 40 2. Basis (i.c. normalized net income, revenue, Adjusted net income total assets, other) Justification: Based on prior experience with the client we conclude that adjusted net income is an appropriate base for planning materiality 41 42 43 44 45 46 Standard und 3. Peroentage of financial data source used: 47 48 49 50 4. Amount selected (planning materiality) 2.527/454 B-1 Pr A-5 Materiality Memo A2 PBC 2020 Trial Balance = t Program A-1 PBC 2019 Trial Balance Workbook Statistics 72 0 Type here to search D Question Apoki Cart Download file Apiolo Pary When A CHY o https://www.officeapps.live.com/op/view.aspx?tric Amarelo di media where alon.com We've opened your file for quick and easy viewing right in Microsoft Edgo. Choose Download the W you want to use it later Apollo Preliminary Analytical Procedures Audit Mini CaseView.only Draw Page Layout Formulas View Help 6 Viewing Times New R 12 BA Search Alt Excel Data Review File Home Insert D 50 2X 4 Amending) 52 58 5. Prior your family 6. Prematy/Tolerable moment of planning materiality) 19.01 35 7. Listiny prebold for med) (sing to 10% of planning materially based on expected level of adjustment is may appropriate 59 1373 56 57 58 59 0 A-5 Materiality Memo B-1 Prelim Analytical Procedure A-2 PBC 2020 Trial Balance > Program A-1 PBC 2019 Trial Balance Workbook Statistics Type here to search 22 O 9 7 2 Engagement Partner A Anderson Engagement Quality Control Reviewer Ernest Olda 1 Reserve for inventory Obsolescence O H T -1 Prepared by Rewww.by 3 5 Unaudited 2000 Raw | HAI L Teror Change (United) (CYPY (Raw Change 7 8 9 10 11 12 13 14 5 6 Apollo Shoes, Inc Preliminary Analytical Procedures Audited 2019 Account ID Account Description (Audited) 10100 Cash on Hand 10200 Regular Checking Account 10300 Payroll Checking Account 10100 Savings Account 11000 Accounts Receivable 11400 Other Receivables 11500 Allowance for Doubtful Accounts 12000 Inventory 12.300 Reserve for laventory Obsolescence 14100 Prepaid Insurance E B-1 Prelim Analytical Procedure D E G H 25 B16 Reserve for Inventory Obsolescence A B 18 14200 Prepaid Rent 19 144300 Office Supplies 20 14400 Notes Receivable-Current 21 14700 Other Current Assets 22 15000 Land 23 15100 Buildings and Land Improvements 24 15200 Machinery, Equipment Office Furniture 1 7000 Accum. Depreciation 26 19000 Investments 27 19900 Other Noncurrent Assets 28 20000 Accounts Payable 29 23100 Sales Tax Payable 30 23200 Wages Payable 31 23300 FICA Employee Withholding 32 23350 Medicare Withholding 33 23400 Federal Payroll Taxes Payable 34 23500 FUTA Tax Payable 35 23600 State Payroll Taxes Payable D F G H 36 37 33 39 30 41 12 41 44 15 16 -17 18 19 A B 33700 SUTA TRX Payable 23800 FICA Employer Withholding 23900 Medicare Employer Withholding 34100 Line of Credit 24700 Current Portion Long-Teem Debt 24700 Other Cureat Lahilities 27000 Notes Payable Noocurre 39003 Como Stock 39005 Pald-in Capital 19005 Retained Earnings 10000 Sales 41000 Sales Return 42000 Wireary Expense 45000 Income from Investments 46000 Interest Income 47000 Miscellaneous Income 30010 Cost of Goods Sold 57500 Freight -3 E 51 53 A-5 MaterialityMemo B-1 Prelim Analytical Procedure - Program A-2 PBC 2020 Trial Balance A-1 PBC 2019 Trial Balance Workbook Statistics v Times New RO 12 Goneral BIG D G H 54 SS 56 57 58 59 60 61 62 E Reserve for Inventory Obsolescence B 60000 Advertising Expense 61000 Auto Expenses 62000 Research and Development 64000 Depreciation Expense 64500 Warehouse Salaries 65000 Property Tax Expense 66000 Legal and Professional Expense 67000 Bad Debt Expense 68000 Insurance Expense 70000 Maintenance Expense 70100 Utilities 70110 Phone 70120 Postal 71000 Miscellaneous Office Expense 72000 Payroll Tax Exp 73000 Pension Profit Sharing Plan Ex 78600 Controllers Clearning Account 74000 Rent or Lease Expense 4 64 65 66 67 68 69 70 71 A-5 Materiality Memo B-1 Prelim Analytical Pr 22 o search Apollo Mini-Cose - Analytical Review Sot Help 1 50 poems Required information W CONTROL 13 Apologies invoices and shipping documents are presumbered but the second is not checked for missing invoices 14 Apoio accounting and control man has not been Rootlodete 15 Apolos CFO, Lars just joined the company fow yours ago 16 Apolo's credit manager reports to the VP of Marketing Apolo's current products have built in features such asights and 17 loudspeakers that make the product proprint for several niche markets such as eles who like to compete at night police officers on graveyard shifts and musical groups in Apolo's omial sud decor, Karina Ranwez just joined the company this ya 19 Apollo i stalls small and produdes oli segregation of des ver the formation system Apolo's sales to employees, C00 sales, disposals of property cash sales and casos are not subot lo the same set of controls as credit soos 21 in the current year Apollo has soon a significant increase in not income despite strant les Larry Lancaster, Apollo's new CEOs que domineering and dictis 22 Bacing issues Production against Apolo has recently been setsed, but Apollo admits no liability 24 Saare below budget 25 The nemala Grecto Kanna Romet, riports directly to the audit comme MC Graw Hill Proy 1 of 3 III Next > Type here to search O BI B 77F