Worksheet for You Decide Name _Sonia Godoy______ Course Code _________ Grade ___/ Date__/__/__ Questions: Q1: Discuss how the SEC has influence (if any) over the audit of Smackey Dog Foods, Inc. Solution: The SEC was created to help investors get reliable information about the company they are investing in. The Securities Act of 1933 requires most companies planning to issue new securities to the public to submit a registration statement to the SEC for approval. The Securities Exchange Act of 1934 provides additional protection by requiring public companies and others to file detailed annual reports with the commission. The SEC follows the GAAP’s reporting requirement for financial statements. As for Smackey Dog Food they are a …show more content…
Solution: It is common practice to do so part of the audit of the property, plant and equipment accounts. It is possible the client has incorrectly capitalized repairs, rents or similar expenses. Clients commonly include transactions that should be recorded as assets in repairs and maintenance expense, lease expense, supplies, small tools, and similar accounts. If I was to conclude this type of material misstatement is likely, they may need to do larger amounts of debited to the expense accounts. Auditors may use several methods to determine whether manufacturing equipment is encumbered including: - Read the terms of loan and credit agreements - Mail loan confirmation requests to banks and other lending institutions - Have discussions with the client or send letters to legal counsel Q8: The client wants to know if you will be present at the year-end inventory. What is your decision and why? What role or actions will you take at the inventory if you decide to attend the inventory. Why? Solution: I would be present at the year-end inventory because the inventory count is done by in-house personnel. SAS 1 now requires auditors to satisfy themselves about the effectiveness of the client's methods of counting inventory and the reliance they can place on the client's representation about the quantities and physical condition of the inventory. As an auditor, I must: - Be prepared at the time the client counts their inventory for determining year-end balances -
The firm needs to understand the rate at which the items in its stores are depleted to create a system to ensure that the replenishment is done appropriately. According to Bowersox, Closs,
Discuss how the SEC has influence (if any) over the audit of Smackey Dog Foods, Inc.
The Securities and Exchange Commission (SEC) is an important factor to the principal federal regulatory agency. it is an agency that regulates the securities industry. The main goal of the Securities and Exchange Commission is to protect investors and maintain the integrity of the securities markets. Numerous individuals rely on upon the SEC for regulating government securities laws that ensure speculators. The SEC additionally guarantees that securities markets are reasonable and fair and, if fundamental, authorizes securities laws through the proper approvals. Essentially, the SEC directs the exercises of all members in the securities markets—including freely held enterprises, open utilities, venture organizations and consultants, and securities
The U.S. Securities and Exchange Commission came about in 1934 because of the 1929 stock market crash. The government’s mission in establishing the SEC is restoring investor confidence in capital markets by providing reliable information with clear and honest rules. Under the SEC regulations, publically traded organizations must disclose their financial information. This information provides investors common knowledge about buying, selling or holding a particular security. Above all, “the SECs primary responsibilities are to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation” according to the (U.S. Securities and Exchange Commission, 2012).
The U.S. Securities and Exchange Commission’s essential obligation is to ensure protection for investors and keep up the quality of the securities markets. The laws and standards that administer the securities business in the United States get a basic idea: all investors, whether vast organizations or private people, have to have admitted to certain essential facts around a venture before getting it. The Security and Exchange Commission requires open organizations to unveil significant money related and other data to people in general.
Inventory is an asset, and it has value and significance to a company since it can be sold for cash. This usually occurs in a repetitive pattern during the cycle of the business, where inventory is bought, sold, created, and acquired. The central focus of a company should be matching inventory with cost and subsequent revenue (FASB 330-10-1, 2009). Defined clearly, “the primary basis of accounting for inventories is cost,…defined generally as the price paid…to acquire as asset” (FASB, 330-30-1, 2009). The Financial Accounting Standards Board (FASB) chose first-in, first-out (FIFO), last-in, first-out (LIFO), and average cost to be the only methods used to account for inventory dependent on which “reflects period income” the best (FASB 330-30-9, 2009). However, many question the use of historical cost to value inventory to be the best method and, under ideal conditions, these methods to value inventories may need adjustment as well.
8. Ensure that stock balances are accurate and will remain accurate - Implement a comprehensive cycle counting program. A good cycle counting program can replace your traditional year-end physical inventory.
The United States Securities and Exchange Commission (SEC) was established in the mid 1930s during the Great Depression. As a result, the main purpose for its creation was to provide some standard in disclosing financial information and to stop allowing a largely unregulated business environment. However, after the SEC was created, there were still no accounting standards in place, which led to inventing the American Institute of Certified Public Accountants, and also to the Accounting Standards Board. According to Stephen Zeff from Rice University, the American Institute of Accountants (AIA), published the
Inventory: IFRS aimed to provide guidance on “the amount of cost to be recognized as an asset and carried forward until the related revenues are recognized.” (IAS 2-1)
In 1968, the SEC proposed a requirement to report line of business information when registering with the exchange. The proposal required that each company:
➢ The company should establish an independent internal audit team, consist of experience inventory managers. It should also restrict access to employees, whose roles and duties are related to inventory management. Furthermore, it should improve inventory management, particularly related to reruns and defective tires, by having a systems and processes in place that identify inventory requirements, set targets, provide replenishment techniques and report actual and projected inventory status. Finally, it should install security cameras, particularly in the larger storage areas, that would improve physical security of the inventory.
Inventory expenditures may be recognized using either purchase method or consumption basis. The consumption method is a method of accounting for inventories and prepaid costs, such as rent, insurance, materials and supplies, in which goods or services are recorded as expenditures or expenses when used rather than when purchased. Some accountant believe that the year-end inventory should be offset with a fund balance which is non-spendable when no comparable balance is required for cash, taxes receivable, or other assets, and this paper is going to address why some accountant believe in that and how should government report their capital projects and debt services activities in the government-wide statement.
According to the information on the SEC website, all investors, whether large institutions or private individuals, should have access to certain basic facts about an investment prior to buying it, and so long as they hold it. The SEC requires public companies to disclose meaningful financial and other information to the public. This provides a common pool of knowledge for all investors to use to judge for themselves whether to buy, sell, or hold a particular security. Only through the steady flow of timely, comprehensive, and accurate information can people make sound investment decisions. According to The Securities Act of 1933, the law requires full disclosure of information relevant to the securities been offered to the public. The Securities Act of 1933 provides that the investors must be provided with the registration statement and the prospectus that describes the security being offered, the issuing corporation, and the investment or risks related to the security to promote sufficient info to enable sophisticated investors to evaluate the financial risk involved. It is through such disclosure and openness on the part of the directors of the issuing company that there can be an existence of quality and fairness of the offering to the investors.
Major stock exchanges must comply with a strict set of reporting requirements established by the Securities and Exchange Commission (SEC). These exchanges are said to be registered.
The importance of inventory has also pointed out by Herrick (1950) who claimed that it is an important factor in the determination of net income, and the amount established by the inventory is conducted forward against the