Team M ACC556 AU316 Memo you

 Team B ACC556 AU316 Memo one particular Essay

п»їMemorandum

To:

From:

Day: February a couple of, 2015

Re: AU 316

This morning a gathering took place to talk about potentially deceptive activity taking place within Apollo Shoes, Incorporation. After much discussion, one of the most probable fraud scheme at Apollo involves accounts receivable due to the accounts being over-stated. The overstatement is significant enough to warrant extra audit testing. The potential for scams in the accounts receivables lies in the lack of assessment procedures for the allocated of negative debt. There is absolutely no clear advice in just how much should be set aside for this purpose. The atmosphere of Apollo Shoes and boots, including Mister. Lancaster's unwillingness to write away doubtful accounts, is a anxious one best case scenario. The company is usually not turning the profit and moving products as expected. A shipment was sent to Mall-Warts, one of the biggest consumers of Apollo Shoes, following it registered bankruptcy. A purchase order was not located just for this shipment, neither was repayment collected. In spite of Mall-Wart stating that it perhaps have been hit by the recent economic climate and are unable to return the shipment aside from pay the invoice, Apollo Shoes is not going to claim the total amount due because doubtful. The reasoning of eventually the bankruptcy will probably be settled, plus the bill may be paid can be unrealistic best case scenario. Apollo is trying to maintain the lines of credit using its business lovers, and they desire to persuade investors the company is performing well. Apollo does not desire to lose the current traders to additional opportunities. Seen overstating their accounts is incredibly strongly suggested upon review of the documents.

The most important red flag was that the permitting for poor debt price dropped coming from 7. several percent to 2 . 5% after the accounts receivable elevated. In order to prove this theory, it is necessary to gather data on the allowance of bad debts from earlier years, such as percentage of debt that was uncollectable. A review of the significant accounting estimations from last year is also essential. This will determine whether...


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