Q1: Discuss how the SEC has influence (if any) over the audit of Smackey Dog Foods, Inc.

The Securities and Exchange Commission assists in providing investors with reliable information upon which to make investment decision. The SEC has considerable influence in setting generally accepted accounting principles and disclosure requirement for financial statements as a result of its authority for specifying reporting requirements considered necessary for fair disclosure to investors. The SEC has power to establish rules for any CPA associated with audited financial statement submitted to the commission. The SEC adopted rules strengthening auditor independence in January 2003 consistent with the requirements of the Sarbanes-Oxley Act. The SEC rules further restrict the provision of nonaudit services to audit clients, and they also include restrictions on employment of former audit firm employees by the client and provide for audit partner rotation to enhance independence. Although Smackey Dog Foods, Inc. is nonpublic companies, independence rule is applied same as public.

Q2: Discuss the essential activities involved in the initial planning of an audit. How do these all specifically to the Smackey Dog Food client?

Initial audit planning involves four things, all of which should be done early in the audit:
1. The auditor decides whether to accept a new client or continue serving an existing one. Smackey is a new client for Keller CPA. Before they accept the audit, Keller CPA examines the prospective Smackey’s standing in the business community, integrity, financial stability, audit fee and relations with its previous CPA firm.
2. The auditor identifies why the client wants or needs an audit. Smackey wants to have a loan to expand their facilities. Since Smackey has already a loan, the bank requires an audit report before they approve another loan. . The