Ac555

Worksheet for You Decide

Name _Olumide Bejide_ Course Code _AC_555_Grade ___/ Date_04_/13_/2011_

Questions:

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

Solution: The SEC has excessive influence on the audit of Smackey dog Foods. Inc. This can be observed in the audit standards that have to be followed by Keller CPAs, for example the auditor has to establish independence.

Being independent, it is listed as one of the six ethical principles of American Institute of Certified Public Accountants code of professional conduct. The other principles are responsibilities, integrity, the public interest, objectivity and independence, due care, and scope and nature of services. As we know, the team members are required to be objective and independent with regard to audit, by maintaining no conflict of interest with the firm and no relationships with the members of the firm being audited. Under SOX, auditors have to be objective and independent or else legal action can be taken against them in the court. The standards listed above are enforceable for the publically traded companies, but we can also use these standards for the audit of this firm.

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: The following are several of the essential activities involved in the initial planning of an audit and as they relate to Smackey Dog Food Inc.

1. Understand the client’s business and industry. This means that an auditor should get to know the type of business and the industry the client is involved in. Basically, just to brainstorm with other team members and come up with some sort of SWOT analysis. By planning and performing this audit for Smackey, this audit firm can capitalize on it experience in other food manufacturers. So far, members of the audit team, the audit manager Pete and two audit staffers,...