Auditing Process and Procedures for Smackey's Dog Food Inc Term Paper

Auditing Process and Procedures for Smackeys Dog sustenance Inc - Term Paper Example sulfur p profane over the Smackey Dogs food Inc. relate to issues of independence roles for the size up team. The audited account standards is one of the influences to be notice, that have to be followed in establishing the independence of auditing team involved in the audit of Smackey. The relationship between the owners (Kim) husband and the audit manager Pete is going to influence the disclosure and clobberity of the audit contents. The fact that there is a relationship between the bank the bring is being sort and Alan, Kims Husband depicts a loan relationship. SEC requires ethical principles to be observed by auditors. Independence is one of the six ethical principles of the American Institute of Certified Public Accountants (AICPA) tag of Professional Conduct. The other principles are responsibilities, the public interest, integrity, objectivity and independence, due care, and scope and n ature of services. Section 303 of the SEC prohibits officers or directors of a company from manipulating, misleading, coercing or acting fraudulently towards the audit team in a manner to influence the auditor to issues financial information, knowingly or not, that the act could lead to rendering the audit immaterial. In this case, Alan obtains information from the audit manager during beers that will be shared with Kim, the owner and further Sarah who is seek the loan. This is an issue that ought to be addressed as the result will be an adverse opinion. The underlying issues of Bens relationship with the bookkeeper Anita could be controversial in the resulting audit opinion. SEC elaborates on quality of disclosure and evidence. thither is no proof of how far the relationship went but the reliance on the word of mouth. Mutuality of interests is identify in this case between the two parties. This is likely to jeopardize the independence of the audit staff. Over auditing of a company s financial reports only materializes to full disclosure. However, the audit process should be within the indispensable set guidelines given by SEC. Question two In the initial planning of the audit, the activities to be include are an understanding of the company in terms of description and history of the company, tax issues disclosure, types of the customers, the internal audits, quantify of the audit process amongst others. An assessment of the clients business risk will be make to see whether it is achieving its objectives. The audit team should assess the risk of material misstatements arising from Smackeys business risk. This is seen in the proud wastage in Smackeys Best Dog division that presents a lot of business risk, and therefore material misstatement risk. Performance of preliminary analytical procedures. A comparison will be made to that of the industry. This helps in identifying the areas of high risk of materiality. Set materiality and assess acceptable audit ri sk and inherent risk- precise and sure judgment is going to be applied by the auditor in assessing the materiality levels. Question triplet Stages of an audit Planning the auditor outlines all the activities that he will follow during the entire process. The auditor should lay down his plan for the vital internal controls to be assessed. In the case of Smackey, the team should focus on sales forecast, receivables approval and authority followed, armoury taking, fraudulent dealings in the company, debts approval etc. experiment of Internal control this process follows a critical analysis internal controls of the records, procedures and processes followed in the company. The auditor should meditate the sales forecast process, be present during the stock take, and consider evaluating the control checks for stores. The weakness in the stock control is seen where the employee is stealing from the company, assessing the debts and the pending legal suits. The effects of the customer s