You Decide External Auditing

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Q1: Discuss how the SEC has influence (if any) over the audit of Smackey Dog Foods, Inc. Solution: In order to discuss if the SEC has influence or not, we need to understand the important role that the Security and Exchange Commission plays when it comes to Auditing. The SEC's principal objectives are to ensure that the securities markets operate in a fair and orderly manner, that securities industry professionals deal fairly with their customers, and that corporations make public all material information about themselves so that investors can make informed investment decisions. The SEC also requires the auditors to observe the ethical principles set by the American Institute of Certified Accountants (AICPA), such as objectivity, integrity, and independence. The Code of Professional Conduct has strong impact on the auditors; therefore, the Smackey Dog Foods, Inc. the SEC is playing a very important role on the audit report. Q2: Discuss the essential activities involved in the initial planning of an audit. How do these all specifically to the Smackey Dog Food client? Solution: Develop overall audit plan and audit program. The audit plan and program aims to achieve the audit risk objectives of the audit team and to provide reasonable assurance and basis for the audit report and opinion. The members of the Audit team, the audit manager Pete and two audit staffers Ben and Maureen, have to understand the client’s business and industry. Perform preliminary analytical procedures. Keller CPAs needs to compare the performance of Smackey’s with the industry to further support its initial assessment of business risk. These analytical procedures help the audit team indentify areas where the risks of misstatement are very high. The Smackey audit team has to set the acceptable level of materiality. The circumstances of Smackey have to be taken into account in
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