Smackey Dog - Smackey Dog Smackey Dog Food Company Smackey...

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Smackey Dog Smackey Dog Food Company Smackey Dog Foods, Inc is a privately held corporation specializing in natural dog food, both regular and gourmet brands. Smackey Dog is not publicly traded which is evident because they are not following many of the standards that are required through Sarbanes Oxley. Since this is a privately run corporation, they are not required to adhere to the SEC regulations, but adherence to these regulations would actually help Smackey Dog to be more efficiently run and would help them have a better handle on their operations. Although the company is not required to follow SEC regulations, the auditors are still required to follow the audit standards in place with the passing of Sarbanes Oxley. Audit planning is very important. The initial audit planning should be done in the early stages of the audit. The auditor must determine whether to accept the client. It is late in the year to accept new clients, and there are also some major issues with the way the company is being run, in spite of these challenges; Keller CPA’s has agreed to accept Smackey Dog as a client. The second stage in audit planning is to determine why the audit is needed. Since Smackey Dog is not publicly traded, there is no law that requires the company to get a yearly audit. This audit is needed because Smackey Dog is attempting to qualify for a bank loan. Sarah, the CEO of Smackey Dog has met with her banker to attempt to qualify for a $150,000 loan to expand the facilities and equipment. There will be no required reporting to the SEC or stockholders. The bank has already loaned Smackey Dog $150,000 so they need to know that the company is financially stable so that they will not only be able to pay back the initial loan, but they can qualify for the additional $150,000. The third stage in audit planning is to obtain an understanding of the terms of the engagement. Auditors should document their understanding with the client in an engagement letter. This clearly spells out the expectations of the client and the responsibilities and limitations of the auditor. The fourth step in the initial audit plan is to develop an overall strategy for the audit. Keller CPA must understand the nature of the customers business, including areas where there is the greatest opportunity for risk. The audit strategy should include understanding if there is a need for someone with specialized skills as well as the amount of staff needed to accomplish the objectives in the most efficient manner. Once the initial audit planning is complete the auditor can begin conducting the audit using the four stages of the audit.
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1) Planning and risk assessment requires the auditor to have a thorough understanding of the business entity and its environment. Smackey Dog produces natural dog food, started by 3 sisters in their home. They started selling their dog food to local veterinarians and kennels. As their popularity grew, the sisters moved into a larger facility and hired employees. They
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This note was uploaded on 03/27/2012 for the course ACC 557 taught by Professor Jameswiley during the Spring '12 term at DeVry Buckhead.

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Smackey Dog - Smackey Dog Smackey Dog Food Company Smackey...

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