Smackey Dog Food Case Study

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Q 1: Discuss how the SEC has influence (if any) over the audit of Smackey Dog Food, Inc Solution: SEC has a significant influence on the audit of Smackey Dog Food, Inc because it sets certain auditing standards that need to be adhered to while conducting and audit of any organization. One of the standards is ensuring a professional independence of auditors as they carry out their audit. Keller CPA would be more objective in their opinion by maintaining independence in all maters and be free from conflict of interest in performing their professional engagement. Thus, although SEC does not possess direct control over privately held companies like Smackey, it, however, sets up generally accounting principles and disclosure requirements for all auditors to follow in order to prevent fraud and misstatement and to ensure fairness to users of audited financial statements for investment purposes or decision making. Therefore, Keller CPA would be required to follow the six generally accepted auditing standards established by ASB of the AICPA with regards to field work and reporting which were established through the influence of SEC. (Arens, Alvin A., Elder, Randall J., and Beasley 2012 p. 31) Q2: Discuss the essential activities involved in the initial planning of an audit. How do these all specifically relate to Smackey Dog Food client? Solution: Keller CPA would first understand the clients’ industry operations and in particular how the clients’ business functions. This understanding will set the stage for assessing clients’ business risk, risk of significant and material misstatement of the client’s financial positions and the overall audit risk. The four major part of audit planning are: (i) Understanding internal control operatio... ... middle of paper ... ...ble to third parties. Liability under SEC can also arise as well as violation of SAS 99 by not exercising professional skepticism. (Arens, Alvin A., Elder, Randall J., and Beasley. 2012. P. 115-116) REFERENCIES Arens, Alvin A., Elder, Randall J., and Beasley, Mark S. (2012). Auditing and Assurance Services: An integrated Approach. 14th ed. Upper Saddle River: Pearson Hall PCAOB (Public Company Oversight Board), Auditing Standard number 9, audit planning, retrieved 1/22/14 http://pcaobus.org/Standards/Auditing/Pages/Auditing_Standard_9.aspx AICPA (American Institute of CPAs) Section 50, Principles of Professional Conduct, retrieved 1/17/14 http://www.aicpa.org/Research/Standards/CodeofConduct/Pages/et_52.aspx

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