Smackey Dog Foods Audit Case Study
ACC 555 - Auditing & Assurance Services You Decide Project February 23, 2013 Professor Brandy Havens
Q1. Discuss how the SEC has influence (if any) over the audit of Smackey Dog Foods, Inc.
Smackey Dog Foods, Inc. is not a publicly traded company, but the SEC has a direct influence on their audit. Keller CPA’s will need to follow the generally accepted auditing standards put forth by the SEC. Keller CPAs need to remain independent of the client and stay free of conflicts of interest when performing their audit responsibilities.
Q2. Discuss the essential activities involved in the initial planning of an audit. How do these all specifically relate to the Smackey Dog Food client?
1. They need to understand the client’s …show more content…
Under the Professional Code of Conduct Rule 301 the auditor is not to disclose any confidential client information without the specific consent of the client (Arens, Elder, & Beasley, p. 97). Peter has been disclosing to a friend some of the details of the audit, not knowing that there is a relationship between the friend and Smackeys loan officer. This could potentially affect whether or not Smackey will be granted the loan they are seeking, and it’s important the auditor always keep information confidential.
Q11. Discuss the CPA firm’s legal liability concerns for this audit if they make a material unintentional or intentional mistake. Include any other legal liability concerns regarding possible Professional Rule violations.
The Prudent Person Concept states “the auditor is expected only to conduct the audit with due care, and is not expected to be perfect” (Arens, Elder, & Beasley, p. 116). The failure of an audit to uncover material misstatements which resulted in the issuance of an incorrect audit opinion will damage the auditor reputation, but this depends on the reliance of the financial statements by other
Q1. Discuss how the SEC has influence (if any) over the audit of Smackey Dog Foods, Inc.
Smackey Dog Foods, Inc. is not a publicly traded company, but the SEC has a direct influence on their audit. Keller CPA’s will need to follow the generally accepted auditing standards put forth by the SEC. Keller CPAs need to remain independent of the client and stay free of conflicts of interest when performing their audit responsibilities.
Q2. Discuss the essential activities involved in the initial planning of an audit. How do these all specifically relate to the Smackey Dog Food client?
1. They need to understand the client’s …show more content…
Under the Professional Code of Conduct Rule 301 the auditor is not to disclose any confidential client information without the specific consent of the client (Arens, Elder, & Beasley, p. 97). Peter has been disclosing to a friend some of the details of the audit, not knowing that there is a relationship between the friend and Smackeys loan officer. This could potentially affect whether or not Smackey will be granted the loan they are seeking, and it’s important the auditor always keep information confidential.
Q11. Discuss the CPA firm’s legal liability concerns for this audit if they make a material unintentional or intentional mistake. Include any other legal liability concerns regarding possible Professional Rule violations.
The Prudent Person Concept states “the auditor is expected only to conduct the audit with due care, and is not expected to be perfect” (Arens, Elder, & Beasley, p. 116). The failure of an audit to uncover material misstatements which resulted in the issuance of an incorrect audit opinion will damage the auditor reputation, but this depends on the reliance of the financial statements by other