Procedures in Collecting Forensic Evidence
The following events and irregularities were among those found in the Apollo Shoes Inc. Case financial information. These events need an additional attention and possibly investigation to prevent fraud: * In the Minutes of the Audit Committee from October 18, 2011 - Mr. Unum (VP Finance) refused to disclose the information about the circumstances surrounding the unexpected withdrawal of the previous auditing company from the engagement. He also refused to give the new auditing firm permission to contact that company. The relationships between Apollo Shoes Inc. and Smith & Smith, CPA Firm to be reviewed (possible conflict of interest or another fraudulent scheme). * Related-parties transaction: On February 1, 2010, Apollo Shoes Inc. purchased its operating facility and equipment from a company controlled by two previous directors and shareholders of the Company for $623,905.92. Currently, the Company leases a second facility and equipment from the same company for approximately $200,000 per month. The Company’s lease ends in June 2011 at which time all operations will be moved to the central headquarters building. The two previous directors are no longer associated with Apollo Shoes. * Write-offs:
Bad Debt Expense in A/R for year 2010 is equal to the write-off amount for the same period ($1,622,000.00). Requires detailed review.

* Personal loan (Board meeting minutes from June 30, 2011):
"Mr. Unum moved that Apollo advance $1,000,000 to Mr. Lancaster’s personal secretary as a personal loan to cover personal legal expenses related to her previous employer. Mr. Unum further suggested that the promissory note plus accrued interest of 1% per year be due on June 30, 2048. Mr. Lancaster suggested that it be recorded in “other receivables,” rather than “employee advances” so