Essay on Smackey Dog Foods, Inc. by Ljubomir

The Securities and Exchange Commission has the mission of protecting investors by maintaining fair, orderly and efficient markets. The SEC does this in a number of ways, and firms need to pay attention to these ways in order to ensure SEC compliance. The SEC has enforcement authority over a number of areas related to the nation's capital markets, including insider trading, accounting fraud, and providing false information. The SEC's jurisdiction extends to all securities that are traded publicly. Privately-held companies do not need to register with the SEC (SEC.gov, 2012).

Since Smackey is a private company, the SEC regulations are not required. The SEC requires only public companies

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.

The SEC has three main purposes to serve the U.S. stock market. The first and most important is to protect investors by sustaining economic growth. In a sector as risky as the stock market the most important asset for any investor is to research. The SEC makes sure that publicly traded companies show financial statements so investors don’t blindly make financial decisions. In a private company that is not publicly traded the SEC makes sure that their financial information is not leaked. After this has been done publicly traded companies information is published and available for all to see. With reliable data available to the general public in the financial markets helps in transparency and minimizes fraud. The reason information is made public

An auditor traced a sample of purchase orders and the related receiving reports to the purchases journal. The purpose of this substantive audit procedure most likely was to

Auditors should always evaluate the design and test the operating effectiveness of a company’s internal control. The key procedures of the evaluation of design are fulfilled by inquires, observations, and inspections. The same procedures can be used to test the operating effectiveness as well.

Performing internal tests of controls is intended to assess the operating effectiveness of those internal controls. Here the staff would select an area of control to test, perhaps inventory management and return policy. They would then look at the procedures that help prevent fraud or error, talk to management, and observe activities. They would notice there is very little control in place for this area. There is no management oversight or dock security measures, no direct recording of sales receipts, shipping labels, or matching to accounts receivable. This would be noted as an area of additional concern. The next stage is to perform substantive testing procedures, where the purpose is to collect audit evidence that the management assertions made in the financial statements are reliable and in accordance with GAAP. Since my staff is good, they would have noticed the company’s sales projections are weak in control and are overstated by around 11%. They would perform a substantive test of detail in this area by selecting a sample of items from the account balances and finding bank statements, invoices, and test of details of balances. They would likely see specifically where the over-projections are being made. Lastly, in finalization, they would compile a report to management detailing any important matters, evaluating the audit evidence, and considering the type of audit opinion that should be reported. Specifically here, they would

There are six main laws that govern the Securities Industry, but only four that are relevant to the majority of people. The first law is the Securities Act of 1933, which is often referred to as the "truth in securities". The Security Act of 1933 has two basic objectives: to require investors to receive significant information concerning securities being offered for public sale; and to prohibit deceit, misrepresentation, and other fraud in the sale of securities. These two objectives are accomplished primarily by registration which discloses important financial information. While the SEC requires this information to be accurate, there is no guarantee that it will be. However, if investors purchase securities and suffer losses due to the fact that the information given was incomplete or inaccurate they have recovery rights. The registration process requires corporations to supply the essential facts while minimizing the burden and expense of complying with the law. These requirements include a description of the company's properties and the security to be offered for sale, information about the management of the company and financial statements certified by independent accountants. If U.S. domestic companies file this information, the statements are available on

The U.S. Securities and Exchange Commission’s essential obligation is to ensure protection for investors and keep up the quality of the securities markets. The laws and standards that administer the securities business in the United States get a basic idea: all investors, whether vast organizations or private people, have to have admitted to certain essential facts around a venture before getting it. The Security and Exchange Commission requires open organizations to unveil significant money related and other data to people in general.

This involves checking sales that occur at the end of a quarter against inventory, shipments, accounting records and methods. This would uncover certain sales that are put into the books but are not shipped until the next quarter, and improper sales recognition.

The SEC is created in the 1934 Act by Congress, primarily to enforce the newly-passed security laws, to promote overall market stability and to protect investors. Currently, the general mission of SEC is to protect investors, to facilitate capital formation, and to maintain the fair, orderly and efficient markets. SEC has the authority to set accounting and reporting standards for companies, who public trade their securities. It requires all the public companies to disclose financial and other information to the public, so that ensure all the investors have access to basic facts related to the investment before and after buying the investment. SEC oversees and regulated the U.S. security market as well as works closely with many other institutions, including federal departments, self-regulatory organization, state securities regulator and private sector organizations. SEC has five main divisions, which includes corporation finance, investment finance, enforcement, trading and marketing and economic and risk analysis. The corporation finance division regulates and ensures the public companies to offer their basic financial information to all the investors. The division also provides assistance and recommendations to the public companies related to the new and exiting rules. The division of investment management provides guidance, disclosure, rulemaking and risk

When engaged in auditing a public firm, such as Apollo Shoe Inc., an auditor must determine when to trust in the company’s internal controls and when to ascertain auxiliary testing methods are obligatory to analyze control risks. The sales and collection cycle is rather a substantial fraction of the audit because this unique segment employs a multitude of documentation and records ranging anywhere from customer and sales orders, shipping documents, credit memos, and general journal entries; therefore, a working

Transactions include Existence or Occurrence, Valuation and Allocation and Presentation and Disclosure. For this purpose, Arthur Young should have inspected the records and documents, inquired, recalculated, reperformed and used analytical procedures. The types of evidence that should have been collected includes Client’s shipping documents, client prepared accounts receivable aging schedule, vendor invoices, comparisons of current year amounts with those from the prior year and management prepared financial statements and

Securities regulations began when Congress enacted the Securities Act of 1933 in reaction to the 1929 Stock Market Crash—the infamous start of the Great Depression. The legislature created the 1933 Act to safeguard the economy from experiencing another event like the Great Depression. The objective of the Securities Act of 1933 was to “require that investors receive financial and other significant information concerning securities being offered for public sale; and prohibit deceit, misrepresentations, and other fraud in the sale of securities.” In other words, the Securities Act of 1933 required issuers to fully disclose all material information that a reasonable shareholder would require in order to make up his or her mind about a potential investment. The Act focuses on governing offerings by issuers and creating transparency between issuers and investors so that investors receive more protection than prior to the Act.

from the audit procedures performed so as to provide: (i) a sufficient and appropriate record