Smackey Dog Food You Decide Essay

Scoping and Evaluation Judgments in the Audit of Internal Control over Financial Reporting 12.1 EyeMax Corporation . . Evaluation of Audit Differences

2. Test of internal controls: In order to test internal controls the audit team should review Smackey’s documents, records,and reports on file. The audit team should also speak with the staff at Smackey’s to determine if they are following policies and procedures as outlined in company policies.

Moreover, the auditor should preform test for effectiveness of internal controls. He may interview management by asking questions on the process of the transactions and operational activities. He may discuss with management the process of some transactions from beginning to end and then test it by using sample testing. Also he/she should make sure that there is proper control of activities; policies and procedures for adequate segregation of duties are met.

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

Stage 2: Test of internal controls - By testing the effectiveness of the internal controls the auditor can determine the control risk that lies within the company. The audit team can perform tests of controls by making inquiries of appropriate client personnel, examining documents, records, and reports maintained by Smackey, observing control-related activities such as the one done for the inventory procedures for returned Best Boy Gourmet dog food, and re-perform the client procedures.

Smackey Dog Foods, Inc. is a small, private company which specializes in manufacturing and selling natural dog foods. Their new boutique division, Best Boy Gourmet has grown significantly due to recent product demand. The company started small and is operated by sisters Sarah, Kim, and Jillian. Sarah serves as the President and General Manager. Kim is the Production Operation Manager overseeing the inventory, production, and shipment of the dog food with the help of her assistant, Henry. Jillian is in charge of Sales with a team of 12 salesmen in Illinois, Indiana, and Wisconsin. The business is based out of their hometown of Chicago.

The Smackey Dog Food, Inc. is a family owned business. It was started by three sisters, Sarah, Kim and Jillian, in the kitchen of their home. They lived in a suburban area of Chicago, Illinois. Their business is making all natural dog food. After using their own dogs and the neighbor’s dogs as test subjects, it was discovered by local vets, pet stores and grocery stores. These local places began to distribute the dog food. The demand for their food began to increase and they moved their business to a larger facility and hired additional workers. As compared to competitors, Smackey Dog Food, Inc., began to rise

To conduct the audit, the firm must acquire sufficient understanding of the internal control processes to help determine the nature and timing of the audit. However, the audit is not designed to identify deficiencies in internal control or provide assurance. The firm will make the audit committee aware of any significant deficiencies that come to Anderson, Olds, and Watershed’s attention during the audit.

Smackey’s Dog Food Inc is a privately owned company and does not adhere to the practices of the SEC regulations. The financial statements and accounting standards have to comply with the Generally Accepted Accounting Principle (GAAP).

Smackey Dog Foods, Inc. is a privately held corporation and not required to follow guidelines set forth by the American Institute of Certified Public Accountants. Keller CPA’s follow American Institute of Certified Public Accountants (AICPA) guidelines for private or public companies. Generally Accepted Auditing Standards (GAAS) governs audits for privately held companies.

Auditors should always evaluate the design and test the operating effectiveness of a company’s internal control. The key procedures of the evaluation of design are fulfilled by inquires, observations, and inspections. The same procedures can be used to test the operating effectiveness as well.

This is done by gathering information about operations, reviewing financial activity and business procedures, conducting more interviews with key personnel, and observing unit procedures. Auditors will create flowcharts, determine whether internal controls and procedures are operating properly, identify areas of risk and concern, and select which internal controls to test. Internal controls intended to prevent and detect misstatements should also be evaluated and tested. Analytical analysis can possibly detect misstatements. This process compares the company’s revenue and industry trends.

The health of a dog or other pets owned at home is usually affected by the kinds of food eaten by the dogs, the level of the protein and carbohydrate in the food intake, and also the physical exercise that is usually done by the pets. There is a big difference when it comes the right choice of the dog food. The best dog food for pitbulls and the best dog food for the small puppies would be different. Choosing the dog food for the pitbull might not be as easy as choosing the best food for the small puppies. It might happen vice versa for those who have been accustomed to the owner of both dogs. These are the information that you can take a look when you want to seek the right best dog food.

As part of this, external auditors often examine and evaluate internal controls used in managing the risks which could affect the financial accounts, to determine if they are working properly.

Assessing control risk is the process of evaluating the design and operating effectiveness of a company’s internal controls as to how it prevents or detects material misstatements in the financial statement assertions of management (Hayes, Dassen, Schilder, & Wallage, 2005). The conclusion reached as a result of assessing control risk is referred to as the assessed level of control risk. When assessing controls the auditor looks for weaknesses in a company’s internal controls for two reasons: to determine the nature and extent of the substantive tests the auditor will perform and to formulate constructive suggestions for improvements (Hayes, Dassen, Schilder, & Wallage, 2005).