Smakey Dog Foods, Inc
Smackey Dog Foods, Inc
Smackey Dog Foods, Inc is a new client to Keller CPAs firm. The nature of business for this company is to produce natural dog food. Keller has never had any experience in the audit on this industry before. Smackey Dog Foods started in a family kitchen, experienced explosive growth, and have had some troubles handling the accounting side of the business. The auditor identifies that main purpose of Smackey Dog Food to obtain an audit report is to fulfill the bank requirement of additional loan for $150,000 on top of the company’s current existing bank loan for $150,000. Under audit planning, the auditor decides whether to accept a new client or continue serving an existing one. This determination is typically made by an experienced auditor who is in a position to make an important decision. The auditor wants to make this decision early, before incurring any significant costs that cannot be recovered. With Smackey Dog Food, the first thing to address is the SEC’s role or influence over company. Since Smackey is privately owned there is not a direct oversight or reporting role for the SEC. There are many audit risks including non-experience in client's industry, which Keller CPAs shouldn't accept the engagement. However, Keller has had time to devote to the audit and therefore accepted the job. Under engagement staffing required audit specialist, Keller CPAs set an Audit team that have Pete as the audit manager with two audit staffs Ben and Maureen to visit the client, assess the situation, and plan the audit. According to information we’ve obtained from understanding of company background and during audit field work we identified some issue and company control risk related to the follow areas: * Segregation of Duties * Lack of Internal Control - Lack of control on main production for the company. - Lack of control in accounting records procedure - Lack of control in handling and recording accounts receivable *
Smackey Dog Foods, Inc is a new client to Keller CPAs firm. The nature of business for this company is to produce natural dog food. Keller has never had any experience in the audit on this industry before. Smackey Dog Foods started in a family kitchen, experienced explosive growth, and have had some troubles handling the accounting side of the business. The auditor identifies that main purpose of Smackey Dog Food to obtain an audit report is to fulfill the bank requirement of additional loan for $150,000 on top of the company’s current existing bank loan for $150,000. Under audit planning, the auditor decides whether to accept a new client or continue serving an existing one. This determination is typically made by an experienced auditor who is in a position to make an important decision. The auditor wants to make this decision early, before incurring any significant costs that cannot be recovered. With Smackey Dog Food, the first thing to address is the SEC’s role or influence over company. Since Smackey is privately owned there is not a direct oversight or reporting role for the SEC. There are many audit risks including non-experience in client's industry, which Keller CPAs shouldn't accept the engagement. However, Keller has had time to devote to the audit and therefore accepted the job. Under engagement staffing required audit specialist, Keller CPAs set an Audit team that have Pete as the audit manager with two audit staffs Ben and Maureen to visit the client, assess the situation, and plan the audit. According to information we’ve obtained from understanding of company background and during audit field work we identified some issue and company control risk related to the follow areas: * Segregation of Duties * Lack of Internal Control - Lack of control on main production for the company. - Lack of control in accounting records procedure - Lack of control in handling and recording accounts receivable *