Auditing of Smackey Dog Foods, Inc Term Paper Example | Topics and Well Written Essays - 1750 words

Auditing of Smackey Dog Foods, Inc - Term Paper Example The paper tells that U.S. Securities and Exchange Commission (SEC) has an influence in setting the GAAP principles, i.e. ‘Generally Accepted Accounting Principles’ and thus can have a substantial impact over the auditing process to be taken into consideration while reviewing the financial disclosures of Smackey Dog Foods, Inc. From an overall point of view, it plays a vital role in assisting the auditing process involving the financial statements of Smackey Dog Foods, Inc by specifying and reporting requirements necessary for the fair disclosure of accounting. Hence, SEC can assist Smackey Dog Foods, Inc by maintaining orderly, fair & efficient markets and also help in the process of capital formation. SEC can also help Smackey Dog Foods, Inc plan its future expansion and growth strategies ensuring sufficient return to the investors and stakeholders as well. In addition, SEC assists the investors in decision-making and the auditors by generating awareness regarding the v arious legal treatments to be noted while executing the auditing process to ensure a just accounting disclosure which can have certain direct implications on the audit in Smackey Dog Foods, Inc. The essential activities involved in the initial planning of an audit entail certain steps. The first step is the deciding part where the auditor decides whether to serve the new client. Notably, considering the fact that this decision should be taken at an early stage before any significant cost is incurred, Keller CPA will focus on the current situation faced by Smackey Dog Foods Inc. Identification of the need of audit in any organization is also a part of initial planning. To avoid misunderstanding, the audit engagement process will be discussed with the client. With this regards, Keller CPA had sent his staffers, Ben and Maureen, to Smackey Dog Foods Inc. for the audit engagement. The auditor requires independence to perform his work taking into account that there should be no managemen t integrity issues in the organization (American Institute of CPAs, 2012). Question 3: Discuss The 4 Stages Of The Audit and The Major Activities Performed By The Auditor In Each Phase. Give An Example of How Each of these Specifically Applies to the Smackey Dog Food, Inc Audit. For Instance, Examine The Apparent Internal Control Weaknesses and Possible Negative Outcome of Each. The four stages of the audit are Preliminary review, Audit Report, Fieldwork, and Planning. In the planning phase the research and data gathering is done for the audit process. The research and data may contain the prior audit files, board policies, financial reports, administrative regulations, shared audit programs, internet sites and job descriptions among others. A meeting is fixed to introduce what may occur in the audit, the internal auditor meets the desired person from the department to identify the issues, and special areas of concern. Preliminary Review: In the preliminary review the existing contr ol composition will be assessed and evaluated to make the necessary variations in the audit scope draft, program, and questionnaires. Keller CPA will also review the internal control formation of the department by using different kinds of tools and methods to gather and evaluate data about the operation. This will help to ensure about the areas of high risk and to design a program to work in the fieldwork stage. Fieldwork: In this phase auditor will perform transactions and logical reviews, and further relevant information required for the audit. The internal controls of Smackey Dog Foods Inc. are to be recognized during the preliminary review which is being operated and is being determined by Keller CPA. The audit program is to be reviewed to ensure that procedures described within are appropriate