Smackey Dog Foods, Inc. was started by three sisters in their home in the suburbs of Chicago. They built a company based on an idea of making exceptional natural dog food not only for their dogs but also for their community. Its popularity grew and they expanded their business to opening a boutique division named Best Boy Gourmet, with food that must be consumed no later than 3 days after its production. This was the beginning of some issues that as the company grew, these issues grew also.
Major Issues.
There is a lack of solid internal controls in Smackey Foods based on the trust that is being put into certain employees to complete their positions. Some indicators were present that would have indicated that the internal controls should have been appropriately applied. These indicators are waste issues, sales projections being off 11%, and accounts receivable.
The first issue that is found with Smackey Foods, is the fact that there is a lot of waste and it is mentioned a couple times within the narrative. It is odd that even though demand seems to be high that the waste is also high. Since they rely on fresh ingredients they are putting themselves in a precarious position that would put them in a stance to fail in the winter months. If one ingredient is unattainable or late, it can spoil the rest of the materials, which is one indicator why waste is so high. They should have invested in equipment such as refrigeration storage, to keep the materials fresh. Then the waste from lack of use and lack of materials would be solved. Another indicator is the field work observation by Ben and Maureen, who saw bags of the dog food being thrown in the dumpster and then loaded into Henry’s car. These bags are always filling the shipping dock when it should have been restocked. The fact that Henry was not too concerned about the bags when he was asked about it