read a memo that identifies 4 risks based on (a) the prior-year 10-k, (b) minutes from the board meetings, and (c)
Case 1: Apollo Shoes Case-Fraud Risk Assessment AssignmentDue Oct 4th by the beginning of class. One group member submits through Blackboard.Perform a Fraud Risk Assessment and Fraud Brainstorming SessionRead the following Apollo documents (on Blackboard as Apollo Planning Files): (1) the prior-year 10-K,(2) minutes from the board meetings, and (3) the financial statements. Then, meet together as a group andbrainstorm the company’s fraud risks.Based on the list of fraud risks you brainstorm, write a memo that identifies several fraud risks. For eachrisk, explain how you found the risk and why the risk is important to consider.The following page is a template you can use to write your memo. I have added the first fraud risk. Add atleast five more. A-6To: Apollo Audit FilesFrom: Team # 1Julio Rodriguez, Senior JRAneisha Jones AJOmar Salah OSJenny Brown JBDate: October 4, 20X3Purpose:To document our understanding of the company’s risk of material misstatement due to fraud.Procedures:Our team met on October 4, 20X3 for a fraud brainstorming session. Prior to the meeting, team membersreviewed the company’s prior-year financial statements, board minutes, and current-year financialstatements.Results:As a result of the meeting we identified a number of risk factors. For each risk factor we discussedinformation that is necessary to assess fraud risk and assessed each risk factor as high, medium or low.The key risks are as follows: Risk #1-Improper revenue recognition. Improper revenue recognition is presumed to be a fraudrisk on all audits because of several methods of artificially inflating revenue. However, evidencein the board minutes suggests that Apollo’s CEO appears to have a significant focus on earnings,which indicates a relatively high potential for aggressive revenue accounting.Risk #2-[List a fraud risk. Then elaborate on the risk, including where/how you found it.]Risk #3Risk #4Risk #5Risk #6- [and so on for additional identified risks you want to highlight] Conclusion:Throughout the audit we will assess audit evidence, communicate with the audit committee, and continueto assess our audit plan. The results of our fraud assessment will continue to be updated in the audit filesthroughout the engagement.