You Decide Smackey Dog Food Inc.

1936 Words8 Pages

Smackey Dog Foods, Inc., is a privately owned dog food manufacturing company, which was started by three sisters, Sarah, Kim, and Jillian, in the kitchen of their suburban Chicago home. They started by manufacturing a natural dog food with ingredients they bought from a local grocery store. These products were discovered by local pet stores and small grocery stores which also became distributors of their products. A larger facility was then needed as the demand steadily increased for their products. With this expansion the sisters were required to hire more workers and manage a growing company. Compared to their competitors’, Smackey Dog Foods, Inc. sales were on an upward growth trend. With increasing
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* Developing an overall audit plan and program. The objective of the firms audit plan is to achieve the audit risk objectives and to provide a reasonable basis and assurance for the auditor’s report and opinion. (1)

There are four stages in this audit. The first stage is the planning and risk assessment. This stage of the audit is completed during the initial planning. The risks for Smackey Dog Foods, Inc. can be better identified by understanding the business, its industry, environment, management culture, the type of accounting used, and the competition. The auditors should be able to understand why Smackey’s sales are steadily increasing and its competitors sales are declining. To be more specific, the implementation and design of Smackey’s internal control procedures, processes, and systems are studied and analyzed for the audit team to be able to assess the control risk for each of the transaction related audit objectives, which are accuracy, occurrence, classification, completeness, summarization, and timing and posting.
There is a violation of segregation of duties and several questions rose about the company’s internal controls and the reliability of its financial statements because Kim’s assistant is involved in every step of the regular dog’s division of production and shipping. There are no internal controls in place that check on Henry’s assumption of the levels of the

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