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Smackey Questions

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Worksheet for You Decide

Name Cathie Reid Course Code ACC555 Grade ___/ Date_12_/12_/12_

Questions:

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

Solution:

The SEC does not have direct influence over the audit of Smackey Company because, Smackey is not a public held organization, they do not have assets in excess of $10 million, and they do not have over 500 stockholders; which are the requirements for public and privately held companies. The SEC does have indirect influence over the audit because all companies, whether public or private are required to comply with General Accepted Accounting Principles (GAAP) and the SEC plays a significant role in influencing these standards.

The auditors, while not bound by SEC rules they are required to obey specific audit rules and guidelines as outlined under the the American Institute of Certified Public Accountants (AICPA).

The AICPA is responsible for establishing auditing and attestation standards for private companies in the United States and for enforcing a code of professional conduct for its members.

The code is comprised of six principles that the auditors must adhere to. The principles are: responsibilities, the public interest, integrity, independence and objectivity, due care, and the scope and nature of services.

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:

During the initial planning of the audit of Smackey Dog Food, the auditors should discuss the following essential activities: 1) ensure the members of the audit team completely understand what Smackey Dog Food business is about; not only Smackey as an individual business but the dog food industry as a whole; 2) does Smackey have any potential risk that could affect the…...

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