Apollo Shoes Case

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The audit of Other Investments involves examining investments and other assets, including the Phones patent. It is important to note that auditing an asset usually creates an expense as well. The audit program has more procedures than required by Apollo, and lead schedules are adjusted for simplicity. Prepaid insurance requires an adjustment, as only one premium has been expensed in 2007. Prepaid rent and supplies are confirmed in Bradley’s work. Other assets are grouped together on the balance sheet, and a separate lead schedule is created. There is no adjustment to Equity Investments, but it should be noted that AGE#I was created due to an error with the purchase of Synergies. Investment income should also be tested. The Phones patent should be written off since R&D is no longer being performed. The audit procedures for Prepaid and Other Assets involve obtaining schedules of all expenses and determining proper allocation, vouching to supporting documents, studying the nature of each item, and classifying them on the balance sheet. The audit procedures for Investments involve obtaining a schedule of all investments and reconciling with the general ledger, inspecting or confirming securities held, and determining proper classification.

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Audit Other Investments – includes the examination Of Investments and Other Assets (the patent). 112 Examine Interest Income. Points to Remember This is an excellent opportunity to emphasize that when you audit an asset there is usually an expense created also. Notice there are a lot more audit procedures in the audit program then required by Apollo. The lead schedules are also adjusted to be simple and a roll-forward schedule is created as a supporting document to assist in the review process. There will be an adjustment to prepaid insurance.

Only one insurance premium has been expensed in 2007. The insurance confirmations will provide the students with the necessary information. Prepaid rent and supplies are both audited by Bradley and the amounts are confirmed in his work. Due to the make-up of other assets (and the fact that we will group these items together on the year- end Balance Sheet), we have created a separate lead schedule for Other Assets. While there is not an adjustment to Equity Investments, it should be noted that AGE#I was created because of an error associated with the purchase of Synergies.

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In valuing Synergies some students will attempt to expense the commission expense of $7,875. 80, but this amount should be capitalized. Investment Income should be tested in this section. See Step “Other Assets” #5. The Phones patent should be written off since the company is no longer performing R&D. Audit Program -? Prepaid (E) and Other Assets (I) Audit Procedures Audit Objectives PM Ref. Initials Comments Prepaid 1 . Obtain a schedule of all prepaid expenses, deferred costs, and accrued expenses. 2. Determine whether each item is properly allocated to the current or future accounting periods. . Select significant additions to offered and accrued amounts, and vouch them to supporting invoices, contracts, or calculations. 4. Determine the basis for deferral and accrual amounts, and vouch them to supporting invoices, contracts, or calculations. 5. Study the nature of each item, inquire of management, and determine whether the remaining balance will be recovered from future operations. 6. In other audit work on income and expenses be alert to notice items that should be considered prepaid, deferred, or accrued, and allocate to current or future accounting periods. 7.

Scan the expense accounts in the trial balance and ampere to prior year. Investigate unusual difference that may indicate failure to account for a prepaid or accrual item. 8. Study each item to determine the proper current of nonoccurrence balance sheet classification. Investments 1 . Obtain a schedule of all investments, including purchase and disposition information for the period. Reconcile with investment accounts in the general ledger. 2. Inspect or confirm with a trustee or broker the name, number, identification, interest rate, and face amount ( if applicable) of securities held as investments.

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Apollo Shoes Case. (2018, Mar 15). Retrieved from


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