Anderson, Olds and Watershed
Certified Public Accountants
Shoetown, ME 00001

November 11, 20012
Larry Lancaster
President & CEO
Apollo Shoes, Inc.
100 Shoe Plaza
Shoetown, ME 00001
Dear Mr. Lancaster:
Discussion of Regulations & Guidelines related to SOX section 404
Significant Regulations and guidelines related to audits of internal control
Internal control is a very significant aspect for any organization in order to avoid or distinguish fraudulent acts and misstatements in financial reporting. Apollo Shoes’ existing rule should require that the planning, sustaining, and implementing of guidelines and processes for financial reporting to be performed by management.
The Sarbanes-Oxley Act of 2002 Section 404(a) suggests that executives of an organization should present a report with details regarding internal control and list the obligations of management for instituting and sustaining a sufficient structure of internal controls and techniques for monetary reporting in conjunction with an evaluation of the usefulness of the recognized structure of internal control and processes for financial reporting at the end of the fiscal year. Section 404(b) also requires auditors to present a statement on the efficiency of internal control over financial reporting that can be presented independently or comprised in the concluding report.
Also, on the internal control report, Apollo Shoes’ is responsible for identifying the structure utilized to evaluate its success while it is our responsibility to achieve comprehension and knowledge of Apollo Shoes’ internal control framework in order to evaluate the threat of material misstatement of the financial report.

Internal Control Risks Identified within Apollo Shoes
The management team of Apollo Shoes is accountable for establishing operative internal controls over the process of financial recording.