Acct 555 - You Decide

Worksheet for You Decide

Name: Christopher Todaro

Course Code: ACCT 555

Grade ___

Date: 02/19/15

Questions:

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

Solution:

The SEC would have very limited influence over the audit of Smackey Dog Foods, Inc. (“Smackey”). This is primarily due to the fact that Smackey is not a publicly traded company and is therefore not subject to SEC regulations. As such, they would not be required to file the reports normally required under the securities act.

However, it should be noted that the SEC maintains significant influence over the generally accepted accounting principles (“GAAP”), which govern the required disclosures for all financial statements as well as any changes that may be proposed by the Financial Accounting Standards Board. As such, they would have an indirect influence on the audit due to Keller CPA being subject to the auditing standards established by the Auditing Standards Board.

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:

There are eight major parts to audit planning, they are as follows;

1. Acceptance of the client and perform initial audit planning – In essence, Keller CPA has already accepted Smackey as a client. However, they should continue with the standard client acceptance procedures and ensure that the acceptance of the engagement is in the best interest of the company. Initial planning will be performed including the notation as to the primary reason behind the engagement, which is the client’s desire to secure another bank loan in order to continue to advance their business. This is important to consider during initial planning as it can assist Keller in determining which areas of importance should be focuses on during the engagement. During this phase, Keller will finalize the terms of the engagement and...