PENGANTAR PRAKTIK PENGAUDITAN

AUDIT PLANNING ( 1-5)

DISUSUN OLEH ,

1. M. WILDAN SULTHON AL FIKRI 041811333006

2. DENNIS WILLIAM PLATE 041811333183
3. ROSALINA 041711333201

KELOMPOK 4
KELAS N

FAKULTAS EKONOMI DAN BISNIS

UNIVERSITAS AIRLANGGA
 Document Title: GA-1
Anderson, Olds, and Watershed, CPAs
October 21, 2014
Mr. Larry Lancaster, President
Appolo Shoes, Inc.
100 Shoe Plaza
Shoetown, ME 00001
Dear Mr.Larry Lancaster :
You have requested that we audit the financial statements of Apollo Shoes,Inc., which comprise the balance sheet as of
December 31, 2014, and the related statements of income, changes in stockholders’ equlity, and cash flows for the year
then ended, and the related notes to the financial statements. We are pleased to confirm our acceptance and our
understanding of this audit engagement by means of this letter. Our audit will be conducted with the objective of our
expressing an opinion on the financial statements.
We will conduct our audit in accordance with auditing standards generally accepted in the United States of America
(GAAS). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free from material misstatement. An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to
fraud or error. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness
of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial
statements.
Because of the inherent limitations of an audit, together with the inherent limitations of internal control, an unavoidable
risk that some material misstatements may not be detected exists, even though the audit is properly planned and
performed in accordance with GAAS.
In making our risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of
the financial statements in order to design audit procedures that are appropriate in the circumstances but not for the
purpose of expressing an opinion on the evectiveness of the entity’s internal control. However, we will communicate to
you in writing concerning any significant deficiencies or material weaknesses in internal control relevant to the audit of
the financial statements that we have identified during the audit.
Our audit will be conducted on the basis that management acknowledges and understands that they have responsibility
a. for the preparation and fair presentation of the financial statements in accordance with accounting principles
generally accepted in the United States of America;
b. for the design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free of material misstatement, whether due to fraud or error; and
c. to provide us with
I. access to all information of which management is aware that is relevant to the preparation and fair
presentation of the financial statements such as records, documentation, and other matters;
II. additional information that we may request from management for the purpose of the audit; and
III. unrestricted access to persons within the entity from whom we determine it necessary to obtain audit
evidence.
As part of our audit process, we will request from management written confirmation concerning representations made to
us in connection with the audit.
As part of our engagement for the year ending December 31, 2016, we will also prepare the federal and state income
tax returns for Apollo Shoes,Inc.
Our fees will be billed as work progresses and are based on the amount of time required at various levels of
responsibility, plus actual out-of-pocket expenses. Invoices are payable upon presentation. We will notify you
immediately of any circumstances we encounter that could significantly affect our initial estimate of total fees of
$750,000.
We will issue a written report upon completion of our audit of Apollo Shoes, Inc. financial statements. Our report will
be addressed to the board of directors of Apollo Shoes. We cannot provide assurance that an unmodified opinion will be
expressed. Circumstances may arise in which it is necessary for us to modify our opinion, add an emphasis-of-matter or
other-matter paragraph(s), or withdraw from the engagement.
Please sign and return the attached copy of this letter to indicate your acknowledgement of, and agreement with, the
arrangements for our audit of the financial statements including our respective responsibilities.
Yours very truly
 Anderson, Olds, and Watershed, CPAs

Document Title: GA-2

AUDIT MEMO STAFFING

To : Darlene Wardlaw
From : Bradley Crumpler
Subject : Apollo Shoes Audit Staffing Memo

After reviewing 2013 10-K filing with the SEC, the board of director minutes and other
documents pertaining to Apollo Shoes, inc. here is our initial recommendation for staffing
requirement:

 Audit Engagement Partner : someone who has industry knowledge and will have
the final responsibility for the audit.
 Audit Manager : the audit manager will be in charge of overseeing the
audit engagement, including planning the work, supervising any assitants
and communicating with the client.
 IT Audit Specialist : help oversee and monitor Apollo Shoes information technology
system to ensure proper policies, procedure, and controls are in place to mitigate
control risk, also to compile complex data into coherent report for the audit
committee. IT specialist is further needed to determine the value of installing Apollo
Shoes new information system and to understand the reason for the $ 44 million
draw for a plan with original budget up to $1.2 million.
 Tax Partner : Help to oversee and to monitor the filling of Apollo Shoes Tax Return
and Federal Tax Return as per Apollo Shoes request.
 Quality Assurance Partner : responsible to review the work in areas with significant
risk, from evaluating judgment made by the audit team until the conclusion
reached.
 PP&E Specialist : help and oversee Apollo Shoes PPE, and to help understand the
true value of the $ 1.3 million equipment for recently new in-house product
manufacturing
 Audit Staff
These staff should cover our need in regard to the Apollo Shoes, inc. We will let you know if
I come across any other areas during the audit.
 POINT 3
Functional Balance Sheet Areas Substantive Audit Procedure
Cash - Bank Confirmation
Obtain a complete list of bank accounts
as well as related loan and similar
contracts.
- Bank Reconcilliation
Examine the client’s bank rencociliation
as of year end, including cash-in-transit
accounts, to verify the proper
renconciliation of bank statements and
general ledger accounts.
- Cash cutoff
Test cutoff of cash receipts and cash
disbursements for transfers between
different bank account at the balance
sheet date.
- Cash Valuation
Test appropriate valuation of cash and
cash equivalents (including overdrafts) in
foreign currencies.

Account Receivable - Agreement of subledger with general

ledger
Agree receivables subledger to the
general ledger control account and
investigate large and unusual reconciling
items.
- Confirmations and subsequent cash
receipts
Verify the existence of accounts
receivable trade through confirmation,
examination of subsequent cash receipts,
or other alternative procedures as
appropiate.
- Allowance for doubtful accounts
Evaluate the adequacy of the allowance
for doubtful accounts.
- Other adjustments to accounts
receivable
Evaluate the adequacy of other
adjustments to accounts receivables, such
as rebates, credit memos, discounts.
- Accounts receivable in foreign
currencies
Test appropriate valuation of accounts
receivables in foreign currencies.
- Credit balances and unusual items
Inquire about or review list of credit
balances and investigate large items.
Inventory - Observation of physical inventories
Observe the taking of physical
inventories. Verify that client count
instructions are followed and that
inventories owned by the others are
separated.
- Confirmation of inventories held by
others
If Significant, confirm inventories held
by others at the physical inventory date
and trace confirmed quantities to the
inventory compilation.
- Reconciliation of inventory
compilation with general ledger
Review the client prepared control
account reconciliation, at inventory count
date and year end, and identify and
investigate any large/unusual reconciling
items.
- Rollforward procedures
If inventories are taken at an interim date,
review the rollfoward documentation in a
manner responsive to our combined risk
assessment and investigate unusual.
- Inventory cutoff
Trace the cutoff information obtained
during the physical observation to the
accounting records of sales and
purchases.
- Valuation in accordance with
accounting policies
Test the valuation of inventory to verify
that it is performed in accordance with
the client’s accounting policies or
applicable financial reporting framework.
- Net realizable value testing
Test the allowances to reduce the
valuation of inventory to net realizable
value, e.g., reserves for slow moving
items, obsolescence or lower of cost or
market.
Prepaids - Verification of Existence and
Valuation
Verify existence and carrying amounts
through examining of supporting
docuents, or confirmation or a
combination of those procedures
PPE - Agreement of subledgers with general
Ledger
Obtain schedule of PPE including capital
leases and any additions or disposals.
And see reclassification and depreciation.
- Additions and Disposal
For significant Additions and Disposal,
check invoices, capital expenditure
authorization and related document
support.
- Lease, Repair and maintenance
Review and examine support for leases
under operating leases and for significant
costs for repairs, maintenance and other
expense accounts to determine whether
they should be capitalized as property,
plant and equipment.
 - Depreciation, depletion and
amortization
Review the reasonableness of
depreciation, depletion and amortization
costs with reference to client accounting
policies or applicable financial reporting
frameworks and expectations for the
current year.
- Impairment of property, plant and
equipment
Use the information obtained during the
audit to determine whether management
has identified indicators of impairments.

Other Assets - Check the inception of transaction.

- Nature of balance
- Document supporting paper related to the
balances.
Current Liabilities - Verify payable aging report.
- Inspection of supporting documents.
- Confirm accounts payable by direct
correspondence with vendors.
- Reconcile liabilities with monthly
statement from creditors.
- Inquire about any unrecorded invoices.
Notes Payable - Verification of notes payables and
related obligations
Confirm notes payable or review
supporting documenation as to amounts
owed, terms, collateral and restrictions
and the debtor’s compliance with the loan
provisions and identify liens, security
interest, and assets pledged loan
collateral.
- Inspection of contracts
Inspect documentation of loan agreements
or other short-term lending arrangements
to determine the termsm restrictions,
revolving lines if credit, and other
pertinent provisions of notes
payable
Stockholder’s Equity - Summarizing and reviewing all equity
transactions and supporting
documentation.
- Reviewing equity disclosures for
compliance with the requirements of the
reporting framework (GAAP)
- Reviewing all equity accounts for
proper classification

Revenue - Overall analytical review for

significant income statement accounts
Perform an overall analytical review for
all significant income statement accounts
and investigate any significant changes or
lack of expected changes
- Create comparative summaries of all
significant revenue accounts, comparing
the current year amounts with historical
data
- Review sales invoice documentation
Expenses - List of all major expenses and nature of
payment
- Compare expenses to budget and
examine any unexplained variances
- Authorization process of payment of
expenses.

Apollo Shoes, Inc.
Relevant Matters from Minutes
12/31/2014
Information Relevant to 2014 Audit
January 6, 2014
Larry Lancaster, Chairman of the board,
President over the first meeting of the year
Sales expected to increase 10%
COGS and expense to remain constant
Authorized purchase of $1.3 million in
equipment
Short-term credit refinanced, rolled into long
term Note Payable
Officers’ salary increase 10%
Cost of Superbowl ad rose 10% ($1 million)
June 30, 2014
Damages caused by Nor’easter storm
amounted to $50,000
Company raised price by 10% to meet
expectation of sales revenue
Eliminating Research and Development costs
for the year
Saved postage and telephone expenses
through email
Write off account receivable for $23,810.13
$1,250,000 personal loan to Mr. Lancaster’s
secretary
Authorized purchase of $1.2 million in new
computer system
The Board authorized a draw on the line of
credit of $44,403,000 for expenses
January 6, 2015
Hired Anderson, Olds, and Watershed for
$750,000
Approved cash dividend of $860,000
(disbursed on 03/01/15, recorded on
12/31/14)
Litigation of $12,000,000 for negligence
Machinery purchased in 2014 isn't
operational yet
Proposed Officer’s bonus by Mr. Lancaster
and approved
Increased by employee contributions by
$300,000
Superbowl ad was not aired this year
Document Title: GA-3
Audit Action Recommended
Investigate Larry’s background
Note for analytic review of expenses
Note for analytic review of expenses
Vouch to supporting documentation, trace to
PP&E work papers
Note for review of liabilities work; ensure
proper accounting and disclosure
Note for payroll analytic procedures
Note for review of expenses
Note for review of expenses
Note for revenue analytic procedures
Note for analytic review of expenses
Note for analytic review of expenses
Check estimates on write-off
Vouch to supporting documentation,
checking proper account classification
Vouch to supporting documentation, trace to
PP&E work papers
Investigate Boards activities, Note for review
of expenses, Vouch to supporting
documentation.
Note for review of expenses
Note for analytic review of dividends
Note for analytic review of lawsuit
Check on status of machinery
Investigate Mr. Lancaster for conflicts of
interest
Note for analytical review of expenses
Investigate expenses related to Superbowl ad.
Vouch to supporting documentation
 Document Title: A-1
Apollo Shoes, Inc.
Working Trial Balance
Comparative Balance Sheet
12/31/2014
Adjusments
Current
W/P Last Year's Current Year
Acct Acct Title Year
Ref (Audited) (Unaudited) Dr. Cr.
(Audited)
10100 Cash on Hand $1.987,28 $2.275,23
Regular Checking
10200 Account $198.116,52 $557.125,92
Payroll Checking
10300 Account $0,00 $0,00
10400 Savings Account $3.044.958,13 $3.645.599,15
11000 Accounts Receivable $16.410.902,71 $51.515.259,98
11400 Other Receivables $1.250.000,00
Allowance for Doubtful
11500 Accounts $1.262.820 $1.239.009,75
12000 Inventory - Spotlight $18.825.205,24 $67.724.527,50
Reserve for Inventory
12300 Obsolescence $3.012.000,00 $846.000,00
14100 Prepaid Insurance $743.314,38 $3.424.213,78
ASSETS 14200 Prepaid Rent $200.000,00 $0,00
14300 Office Supplies $7.406,82 $8.540,00
Notes Receivable-
14400 Current $0,00 $0,00
14700 Other Current Assets $0,00 $0,00
15000 Land $117.000,00 $117.000,00
Buildings and Land
15100 Improvements $623.905,92 $674.313,92
Machinery, Equipment,
15200 Office Furniture $433.217,10 $2.929.097,13
17000 Accum. Depreciation $164.000,00 $610.000,00
19000 Investments $572.691,08 $1.998.780,39
Other Noncurrent
19900 Assets $53.840,59 $53.840,59
TOTAL ASSETS $45.671.365,65 $136.595.583,34
20000 Accounts Payable $4.633.118,09 $1.922.095,91
23100 Sales Tax Payable $0,00 $0,00
23200 Wages Payable $29.470,32 $0,00
FICA Employee
23300 Withholding $1.318,69 $8.439,65
23350 Medicare Withholding $583,99 $11.414,99
Federal Payroll Taxes
LIABILITY 23400 Payable $6.033,01 $118.086,12
23500 FUTA Tax Payable $0,00 $0,00
State Payroll Taxes
23600 Payable $2.815,47 $55.106,86
23700 SUTA Tax Payable $0,00 $0,00
FICA Employer
23800 Withholding $1.318,69 $8.439,65
 Medicare Employer
23900 Withholding $583,99 $11.414,99
24100 Line of Credit $10.000.000,00 $44.403.000,00
Current Portion Long-
24200 Term Debt $0,00 $0,00
24700 Other Current Liabilities $0,00 $0,00
Notes Payable-
27000 Noncurrent $0,00 $12.000.000,00
TOTAL LIABILITIES $14.675.242,25 $58.537.998,17
39003 Common Stock $8.105.000,00 $8.105.000,00
EQUITY 39004 Paid-in Capital $7.423.000,00 $7.423.000,00
39005 Retained Earnings $2.219.120,65 $6.590.483,64
TOTAL EQUITIES $17.747.120,65 $22.118.483,64
 Document Title: A-2
Apollo Shoes,
Inc. Working
Trial Balance
Comparative Income
Statement 12/31/2014

Adjusments
Current
W/P Last Year's Current Year
Acct Acct Title Year
Ref (Audited) (Unaudited) Dr. Cr.
(Audited)
40000Sales - Spotlight $246.172.918,44 $242.713.452,88
41000Sales Returns $4.497.583,20 $11.100.220,89
REVENUE 42000Warranty Expense $1.100.281,48 $1.158.128,47
Income from
45000 Investments $0,00 $1.426.089,31
NET SALES $251.770.783,12 $256.397.891,55
50010 Cost of Goods Sold $141.569.221,61 $130.196.645,26
COGS
57500 Freight $4.302.951,46 $4.240.263,09
GROSS PROFIT $105.898.610,05 $121.960.983,20
60000 Advertising Expense $897.140,01 $1.036.854,01
61000 Auto Expenses $208.974,39 $210.502,80
Research and
62000 Development $31.212.334,17 $528.870,44
Depreciation
64000 Expense $133.000,00 $446.000,00
64500 Warehouse Salaries $4.633.383,82 $4.720.715,56
Property Tax
65000 Expense $80.495,32 $99.332,45
OPERATING Legal and
EXPENSE Professional
66000 Expense $3.605.133,96 $4.913.224,45
67000 Bad Debt Expense $1.622.425,99 $0,00
68000 Insurance Expense $853.942,65 $36.106,92
Maintenance
70000 Expense $61.136,04 $35.502,87
70100 Utilities $135.642,99 $137.332,18
70110 Phone $76.373,78 $52.599,02
70120 Postal $128.033,21 $77.803,61
TOTAL OPERATING EXPENSE $43.648.016,33 $12.294.844,31
OPERATING PROFIT $62.250.593,72 $109.666.138,89
46000 Interest Income $204.302,81 $131.881,46
Miscellaneous
47000 Income $2.166.000,00
Miscellaneous Office
71000 Expense $17.023,27 $24.891,82
OTHER 72000 Payroll Tax Exp $1.550.989,06 $1.577.811,85
INCOME Pension/Profit-
(EXPENSE) 73000 Sharing Plan Ex $3.000.000,00 $3.300.000,00
Rent or Lease
74000 Expense $2.603.485,87 $1.206.574,00
Administrative
77500 Wages Expense $16.875.305,98 $16.197.225,43
78000 Interest Expense $875.000,00 $2.591.736,50
 Document Title: A-3
Apollo Shoes,
Inc. Working
Trial Balance
Comparative Statement of Cash
Flow 12/31/2014

Adjusments
Current
W/P Last Year's Current Year
Acct Acct Title Year
Ref (Audited) (Unaudited) Dr. Cr.
(Audited)
Cash Flows from Operating Activities
Net Income $4.371.000,00 $75.065.780,75
Adjustments to Reconcile Net Income
to Net Cash Provided
Depreciation and Amortization $133.000,00 $446.000,00
Changes in Operating Assets and
Liabilities
Decrease (Increase) in Current
Assets
Accounts Receivable -$12.410.000,00 -$35.104.357,27
Inventory -$1.990.000,00 -$48.899.322,26
Prepaid Expense -$599.000,00 -$2.680.000,00
Increase (Decrease) in Current
Liabilities
Accounts Payable and Accrued
Expense $1.119.000,00 -$2.711.022,18
Total Adjustments -$13.747.000,00 -$88.948.701,71
Net Cash (used for) Operating
Activities -$9.376.000,00 -$13.882.920,96
Cash Flows from Investing Activities
Capital Expenditure -$834.000,00 -$3.971.000,00
Purchase of Other Assets -$54.000,00
Net Cash (used for) Investing
Activities -$888.000,00 -$3.971.000,00
Cash Flows from Financing Activities
Preceeds from the Issuance of
Debt $10.000.000,00 $34.403.000,00
Proceeds from the Issuance of
Common Stock
Net Cash Provided by Financing
Activities $10.000.000,00 $34.403.000,00
Net Increase (Decrease) in Cash -$264.000,00 $16.549.079,04
Cash at Beginning of Year $3.509.000,00 $3.245.000,00
Cash at End of Year $3.245.000,00 -$4.542.000,00