| Smackey Dog Foods, Inc. | Pre Audit Analysis | | Nikki Leach | 4/17/2012 |

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Smackey Dog Food is a privately held company started by three sisters in Chicago, IL. Smackey manufactures a natural dog food and distributes it to pet stores, small grocery stores, kennels and veterinarians. The company has also started another line of high end single serve pre-packaged dog food they only sell through their website. Smackey is looking to expand and therefore needs to take out another loan; they currently have a loan that is secured by manufacturing equipment purchased with the money. The bank is asking for an audit of financial statements to determine if they will approve a second loan. The company wants to use receivables to secure the loan. We have been hired to conduct an audit of the financial statements. The SEC has no influence over the audit since Smackey is a private company; however, since Keller CPA is auditing the financial statements we will be following GAAP. Although the SEC has no influence we will be following any guidelines put forth by the SEC in regards to private companies to determine the financials are presented fairly. In the future if Smackey should decide to go public there are numerous steps that will need to be followed. We have assigned Peter as the audit manager and he will be assisted by Ben and Maureen. They will assess the client and plan the audit. The initial planning involves four things to be done early in the audit. The first step is to decide if we will accept the audit. We have decided to accept even though it is late in the year and we have never audited this type of business before. We have determined the reason for the audit, which will affect the remaining planning for the audit, is that Smackey Foods is trying to secure a loan and the bank has asked for an audit of the