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Company’s most recent fiscal year. As part of management’s responsibility for the financial statements and the effectiveness of internal control over financial reporting, management is responsible for making available to us, on a timely basis, all of the Company’s financial records and relevant information E X H I B I T 3 – 1 Final […]

Establishing and maintaining internal control over financial reEstablishing and maintaining internal control over financial reporting; •  Evaluating the effectiveness of the Company’s internal control over financial reporting using suitable control criteria;   •  Supporting its evaluation with sufficient evidential matter, including documentation; and   •  Presenting a written assessment of the effectiveness of the Company’s

Management’s Responsibilities The Company’s management is responsible for the financial statements, including disclosures, and information referred to above and for establishing and maintaining effective internal control over financial reporting. In this regard, management is responsible for establish- ing policies and procedures that pertain to the maintenance of accounting records, the authorization of receipts and disbursements,

Audit Planning and Basic Auditing Concepts mes32502_ch03_067-097.indd 74 10/14/15 02:03 PM A Sample Engagement Letter—EarthWear Clothiers (continued) Company’s internal control over financial reporting, to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We

Our Responsibilities and Limitations The objective of a financial statement audit is the expression of an opinion on the financial statements. We will be responsible for perform- ing the audit in accordance with the standards established by the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether

Audit Planning, Types of Audit Tests, and Materiality 73 mes32502_ch03_067-097.indd 73 10/14/15 02:03 PM A Sample Engagement Letter—EarthWear Clothiers Willis & Adams, P.C. Boise, Idaho April 1, 2015 Mr. Chad Simon Chair, Audit Committee EarthWear Clothiers P.O. Box 787 Boise, Idaho 83845 Dear Mr. Simon: The purpose of this letter is to confirm our understanding

Establish an Understanding with the Entity The auditor should establish an understanding with the entity about the terms of the engage- ment. This understanding reduces the risk that either party may misinterpret what is expected or required of the other party. The terms of the engagement, which are documented in the engagement letter, shoul Establish

Audit Planning and Basic Auditing Concepts mes32502_ch03_067-097.indd 72 10/14/15 02:03 PM level of risk, the firm should staff the engagement with more experienced auditors. Simi- larly, if the audit involves a specialized industry (banking, insurance, and so on) or if the entity uses sophisticated IT processing or holds financial instruments, the firm must ensure that

Income statement data: Net Sales Pretax Income Percent of net sales Net income Per share of common stock: Basic earnings per share Diluted earnings per share Common shares outstanding Balance sheet data: Current assets Current liabilities PPE and intangibles Total assets Noncurrent liabilities Shareholders’ investment Other data: Net working capital Capital expenditures Depreciation and amortization