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Ocean manufacutring inc the new client acceptance decision solutuons

Given the attached case study and dataplease answer the below questions: The client acceptance process can be quite complex. Discuss five procedures an auditor should perform in determining whether to accept a client. Which of these five are required by auditing standards and identify the applicable standards? Using Ocean's financial information, calculate relevant preliminary analytical ratios to obtain a better understanding of the prospective client and to determine how Ocean is doing financially.

  1. Consider the composition and autonomy of the Board of Directors and the Audit Committee, including the number of independent outside directors. Carefully justify your position in light of the information in the case.
  2. Consideration should be given to reading available financial information regarding the prospective client such as annual reports, registration statements, Forms 10-K, other reports to regulatory agencies and income tax returns.
  3. Compare Ocean's ratios to the industry ratios provided. Inquire as to the general reputation of high ranking employees, influential directors and shareholders, as well as the entity itself.

Compare Ocean's ratios to the industry ratios provided. Identify any major differences.

Ocean Manufacturing: Standards; Analytical Ratios; Financial Statement Audit

What non-financial matters should be considered before accepting Ocean as a client? How important are these issues to the client acceptance decision? Ocean wants Barnes and Fischer to aid in developing and improving their IT system. What are the advantages and disadvantages of having the same audit firm provide both auditing and consulting services?

Given current rules on professional independence in the Joint Code of Professional Conduct, will Barnes and Fischer be able to help Ocean with their IT system and still provide a financial statement audit? As indicated in the case, one of the partners in another office has invested in a venture capital fund that owns shares of Ocean common stock. Would this situation constitute a violation of independence according to the Joint Code of Professional Conduct?

Why or why not?

  1. Background checks obtained by investigative firms may also be useful.
  2. The client acceptance process can be quite complex. Using Ocean's financial information, calculate relevant preliminary analytical ratios to obtain a better understanding of the prospective client and to determine how Ocean is doing financially.
  3. Which of these five are required by auditing standards and identify the applicable standards? Would this situation constitute a violation of independence according to the Joint Code of Professional Conduct?
  4. Such inquiries may be directed to the prospective client's bankers, legal counsel, underwriters, and others in the business community. Consider the composition and autonomy of the Board of Directors and the Audit Committee, including the number of independent outside directors.
  5. Obtain an understanding of the client's business and operations.

Prepare a memo to the partner making a recommendation as to whether Barnes and Fischer should or should not accept Ocean Manufacturing, Inc as an audit client. Carefully justify your position in light of the information in the case. Include consideration of reasons both for and against acceptance and be sure to address both financial and non-financial issues to justify your recommendation.

  • Prepare a separate memo to the partner briefly listing and discussing the five or six most important factors or risk areas that will likely affect how the audit is conducted if the Ocean engagement is accepted;
  • Background checks obtained by investigative firms may also be useful;
  • The accounts show that the company is healthy and the ratios are mainly favorable except that the company is not properly leveraged and this is leading to a loss of opportunities and a lower profit margin and lower return on equity;
  • Include consideration of reasons both for and against acceptance and be sure to address both financial and non-financial issues to justify your recommendation;
  • Prepare a separate memo to the partner briefly listing and discussing the five or six most important factors or risk areas that will likely affect how the audit is conducted if the Ocean engagement is accepted;
  • Carefully consider any matters that may negatively reflect on management's integrity, ability and attitude.

Prepare a separate memo to the partner briefly listing and discussing the five or six most important factors or risk areas that will likely affect how the audit is conducted if the Ocean engagement is accepted. Be sure to indicate specific ways in which the audit firm should tailor its approach based on the factors you identify. Obtain an understanding of the client's business and operations.

Consideration should be given to reading available financial information regarding the prospective client such as annual reports, registration statements, Forms 10-K, other reports to regulatory agencies and income tax returns.

Inquire as to the general reputation of high ranking employees, influential directors and shareholders, as well as the entity itself. Carefully consider any matters that may negatively reflect on management's integrity, ability and attitude.

Such inquiries may be directed to the prospective client's bankers, legal counsel, underwriters, and others in the business community. Background checks obtained by investigative firms may also be useful. Consider the composition and autonomy of the Board of Directors and the Audit Committee, including the number of independent outside directors.

Inquiries should be directed to the integrity of management and the reasons for the change in auditor. The following situations should be carefully considered in assessing whether to accept a client: There appears to be evidence of "opinion shopping.

  • How important are these issues to the client acceptance decision?
  • Obtain an understanding of the client's business and operations.

The accounts show that the company is healthy and the ratios are mainly favorable except that the company is not properly leveraged and this is leading to a loss of opportunities and a lower profit margin and lower return on equity. There are no grounds of objection. Solution Summary In a 2425 word solution, the response provide a great deal of information with which to prepare an excellent paper.