May 24, 2015
May 24, 2015
Chairman of the Board of Directors,
President and CEO
Dear Mr. Lancaster, Thank you for your interest in our services at Anderson, Olds, and Watershed CPAs, LLC. We value your business and will strive to meet all of your expectations. Our firm offers various types of auditing services, including operational, compliance, and financial audits, as well as several attestation services, including reviews and audits of historical financial documents and audits of internal control over financial reporting. The letter is to inform you of the different auditing and assurance services offered by our firm, the benefit each of these services provides to your company, our client, and to inform you of the requirements for meeting the standards for the services we offer. Additionally, I would like to outline Anderson, Olds, and Watershed’s role in providing these services to your company, Apollo Shoes. Auditing is a technique performed by certified public accountants (CPA). In which the accountant accumulates and evaluates evidence to determine the financial statements’ are in compliance with established criteria, such as Generally Accepted Accounting Principles (GAAP). Auditing is the accumulation and evaluation of evidence about information to determine and report on the degree of correspondence between the information and the established criteria. The audit would provide reliable information to decision makers of the company and offer a stable and reliable bottom line to your company.
Description of Service There is a difference between a review and audit of historical financial statements. Both offer assurances by management to the financial statements’ compliance with accounting standards and that the statements are fairly stated. The difference between the two lies within the amount of evidence or information required by the accountant to arrive at an opinion. A historical audit requires much more testing and provides a higher level of assurance. With a review it takes less testing and less evidence, which takes less time spent on the audit, resulting in lower fees associated with the review service. The most common assurance services provided by CPA’s and requested by companies, is the historic financial statement audit. A review is, in most case, is adequate for financial statement users. A review or historic financial statement service provides valuable information to all of the financial statement users. Our attestation service which is an audit of internal control over financial reporting, a CPA will attest attests to management’s assurances on the development and implementation of internal controls and its effectiveness, as required by Sarbanes-Oxley Act. The auditor will perform the audit of internal control over financial reporting in combination with the financial statements audit. Our firm offers different types of audits. The first type is the operational audit, which is an audit that evaluates the organization’s operating procedures and methods for efficiency and effectiveness. Upon completion, the auditor provides recommendations for improving operations to the company’s management. An operational audit covers more than just accounting. The auditor may evaluate marketing, computer operations, production methods, and organizational structure.
The second type of audit is the compliance audit. Compliance audit is conducted to determine whether the auditee is following specific procedures, rules, or regulations set by some higher authority. This may include examining accounting procedures to determine compliance of accounting personnel with procedures set forth by the company’s controller or reviewing wages to verify compliance with wage laws. Both the operational and compliance audits are meant for management use and not normally provided to external user. A financial statement audit