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Smackey Foods

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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 -

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