Smackey Dog Food Audit Case Study

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Worksheet for You Decide Name ________ Course Code ACCT 555 Grade ___/ Date_08/25/13 Questions: Q1: Discuss how the SEC has influence (if any) over the audit of Smackey Dog Foods, Inc. Solution: The SEC would have a significant influence over the audit of Smackey Dog Foods, Inc. Since my firm, Keller CPA’s, has been hired to conduct the audit of Smackey Dog Foods Inc., it can be assumed that Smackey Dog Foods is a privately held company, which means the audit is governed by AICPA and PCAOB auditing standards. The SEC, AICPA, and PCAOB all require independence during an audit. This means that an auditor must maintain independence of the mind and independence in appearance. An auditor’s state of mind must be unbiased and an auditor…show more content…
Plan and Design an Audit Approach- this phase describes everything that was assessed in question 2, including the industry, business risks, fraud risk, and internal controls. The goal of this phase is to assess Smackey Dog Food Inc. to grasp an understanding of the client to develop an audit plan and audit program that will assess the risk of the client and provide reasonable assurance and support the audit report and audit opinion. EX: Weakness in this stage is that Keller CPAs has never audited a dog food company, therefore it will have to rely on industry related audits to understand its clients and the risks associated with the…show more content…
Discuss the various types of confirmations and what forms you will implement and why. Solution: There are two types of confirmations to assess accounts receivables: positive confirmations and negative confirmations. Positive confirmations are addressed to the debtors requesting the receipt to confirm directly whether the balance as stated on the confirmation request is correct or incorrect. A blank confirmation form does not state the amount on the confirmation but instead requests the debtor to fill in the information. An invoice confirmation requires an individual invoice be confirmed rather than the debtor’s entire account receivable balance. Negative confirmations are addressed to the debtors but requests a response only if the debtor disagrees with the stated amount. I would implement an invoice confirmation form under the positive confirmation approach since this appears to be the most reliable procedure. Q6: What are the major factors affecting sample size for confirming accounts

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