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Smackey Dog Foods

In: Business and Management

Submitted By lolli86
Words 2084
Pages 9
Smackey Dog Foods, Inc. has been a very successful dog food manufacturer for the past few years, but along with their success, they have many issues surrounding their management styles and accounting techniques. These issues are a result of management’s inexperience and lack of knowledge of the proper controls related to running a business and the entire accounting aspect.
Q1 Discuss how the SEC has influence (if any) over the audit of Smackey Dog Foods, Inc.
SOLUTION: Although Smackey Dog Foods, Inc. is not a publicly traded company the SEC has a significant influence on their audit. During the audit, Keller CPAs will still need to follow the auditing standards put in place by the SEC. AICPA principles will be followed, ensuring that the Keller CPAs are independent of the client and free of conflicts of interest when performing professional responsibilities.
Q2 Discuss the essential activities involved in the initial planning of an audit. How do these all specifically relate to the Smackey Dog Food client?
SOLUTION:
1. Understand the client’s business and industry. Keller CPAs can use its experience from auditing other manufacturing companies in the audit of Smackey Dog Foods, Inc. The essential part of this step is for the audit team to learn and understand as much as possible of the client’s business and industry. All related parties will be identified in this stage of the planning as well. 2. Assess client business risk. The business risk involved is that Smackey will fail to achieve its objectives. The audit team will assess the risk of material misstatements arising from Smackey’s business risk. 3. Perform preliminary analytical procedures. The function of the auditors here will be to compare the performance of the client to that of the industry, which will help support the assessment of the clients’ business risk, and to identify...

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