...To: Jane Hunter, Audit Partner From: Date: July 2, 2015 Subject: Audit Engagement Acceptance of Ocean Manufacturing, Inc. I am writing this you this memorandum to inform you of my recommendation as to whether to accept the audit engagement of Ocean Manufacturing, Inc. or decline. The discussion below talks about the use of client acceptance factors significant in arriving at my conclusion. It is my recommendation to not accept Ocean Manufacturing, Inc. (Ocean) as an audit client based on the significant client acceptance factors in conjunction with the analysis of both financial information and nonfinancial matters. Relevant Facts * Ocean Manufacturing, Inc. will be Barnes and Fisher’s first home appliance industry client. * Ocean asked Barnes and Fisher to assist in continuing the development of Ocean’s IT system. * Ocean is having issues maintaining a proper inventory and cost tracking system, receivables billing and aging, payroll tax deduction, payables, and balance sheet account classifications. * Barnes and Fisher is unfamiliar with Ocean’s IT system. * Ocean is requesting the firm’s services after its December 31 fiscal year –end. * Ocean has had some management turn over by both the vice president of operations and controller due to “personal issues.” * Ocean has changed auditing firms three times over the past 12 years. * Ocean audit trails during 2014 were not kept intact due to system failures and errors made by untrained personnel...
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...Case 1.1: Ocean Manufacturing, Inc. 1. Identify five procedures an auditor should perform in determining whether to accept a client. Which of these five are required by auditing standards? (check slides) - Obtain and review available financial information - Inquire of third parties about integrity of prospective client and its management - Consider circumstances that require special attention, unusual business or audit risks - Consider the technical competency of potential audit staff and supervision * AS No. 10: Supervision of the Audit Engagement * AU 210 Training and Proficiency of the Independent Auditor - Consider if acceptance would violate regulatory or the Code of Professional Conduct 2. Using Ocean’s financial information, calculate relevant preliminary analytical procedures to obtain a better understanding of the prospective client and to determine how Ocean is doing financially. Compare Ocean’s ratios to the industry rations provided. Identify any major differences and briefly list any concerns that arise from this analysis. Industry Industry 2011 Standards 2010 Standards ROE 8.94% 20.33% 7.11% 26.22% ROA 4.54% 6.62% 3.78% 8.10% Assets to Equity 1.97 3.30 1.88 2.82 A/R Turnover 11.69 7.49 13.11 6...
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...1: Ocean Manufacturing, Inc. Ocean Manufacutring Inc The New Client Acceptance ... www.studymode.com/.../ocean-manufacutring-inc-the-new-client-accept... Ocean Manufacturing, Inc.: the New Client Acceptance Decision: Case 1.1 Ocean ... Problem Solution: Harrison-Keyes Inc. Ayodeji Ajayi University of Phoenix ... Ocean Manufacturing, Inc.: The New Client Acceptance ... www.freecasestudysolutions.com/case-study-Ocean-Manufacturing-Inc-... Case 1.1 Ocean Manufacturing, Inc.: The New Client Acceptance Decision Ocean Manufacturing, Inc. is recommended as a ... ORDER NEW SOLUTIONS ... Solution Manual for Auditing Cases An Interactive Learning ... testbanksfor.com › All test banks and solution manuals Download Solution Manual for Auditing Cases An Interactive Learning Approach 5th Edition by Beasely. Solution Of Ocean Manufacturing Inc Free Essays 1 - 30 www.papercamp.com/group/solution-of-ocean-manufacturing.../page-0 Free Essays on Solution Of Ocean Manufacturing Inc for students. ... ACCT 805AE Case 4 Ocean Manufacturing, Inc The Osprey Group Feb 21, ... Auditing: r c aSe S t h at diSc uSS topicS rel ated to thiS Section 1.1 Ocean Manufacturing, Inc. . Case 1 1 Ocean Manufacturing Inc Free Essays 1 - 30 www.papercamp.com/group/case-1-1-ocean-manufacturing-inc/page-0 Case 1.1 Ocean Manufacturing, Inc.: The New Client Acceptance Decision Ocean Manufacturing, Inc. is recommended as a prospective audit client of Barnes ... 60 Free Essays on Ocean Manufacturing Inc...
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...지난 1개월 지난 1년 기간 설정... 기간 맞춤설정 시작일종료일 ------------------------------------------------- 양식의 맨 위 양식의 맨 아래 모든 결과 모든 결과 사전 완전일치 서울특별시 서울특별시 * 자동검색됨 * ------------------------------------------------- 양식의 맨 위 양식의 맨 아래 검색결과 약 935,000개(0.27초) 검색결과 웹문서 [PDF] client acceptance - Textbook Test Banks textbooktestbank.com/.../BBGP_InstructorResource_... * 저장된 페이지 이 페이지 번역하기 acceptance decision process. To raise ... gathered in the client acceptance process can ... Ocean Manufacturing, Inc. are in the healthcare services industry. Ocean Manufacturing Inc The New Client Acceptance Decision Free ... www.studymode.com/.../ocean-manufacturing-inc-t... * 저장된 페이지 이 페이지 번역하기 20개 항목 - Free Essays on Ocean Manufacturing Inc The New Client ... Case 1.1 Ocean Manufacturing, Inc.: The New Client Acceptance Decision ... Ocean Manufacturing, Inc. The New-Client Acceptance Decision ... Ocean Manufacturing, Inc. - Research Paper - Svenjaj88...
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...Ocean Manufacturing, Inc. การตัดสินใจรับงานสอบบัญชี วัตถุประสงค์การเรียนรู้ 1. เข้าใจประเภทของข้อมูลที่เกี่ยวข้องกับลูกค้าการตรวจประเมินที่คาดหวังไว้ 2. ระบุขั้นตอนที่ผู้สอบตัดสินใจยอมรับลูกค้าที่คาดหวังไว้ 3. ระบุและประเมินปัจจัยที่สำคัญต่อการตัดสินใจรับงานสอบบัญชี 4. เข้าใจกระบวนการในการสร้างและแสดงให้เห็นถึงข้อเสนอแนะที่เกี่ยวกับการรับงานสอบบัญชี บทนำ บริษัทบัญชีของ Barnes และ Fischer เป็นบริษัทตรวจสอบบัญชีรับอนุญาตแห่งชาติขนาดกลาง ปัจจุบันมีหุ้นส่วนที่เป็นผู้เชี่ยวชาญมากกว่า 6,000 คน ที่จ่ายเงินเดือนให้สำหรับปี1994 ส่วนใหญ่บริษัทจะให้บริการตรวจสอบและบริการด้านภาษี แต่เมื่อเร็วๆนี้ก็ประสบความสำเร็จในการสร้างระบบสารสนเทศ ในการให้คำปรึกษาทางธุรกิจสำหรับลูกค้าทั้งที่ไม่ได้รับการตรวจสอบและที่รับการตรวจสอบ ที่ไม่ได้จดทะเบียนในตลาดหลักทรัพย์ ในช่วงกลางเดือนมกราคม 2012 คุณได้เลื่อนตำแหน่งเป็นผู้จัดการฝ่ายตรวจสอบคนใหม่ในสำนักงานของ Barnes และ Fischer ที่ตั้งอยู่ในตะวันตกเฉียงเหนือแปซิฟิก คุณดำรงตำแหน่ง Senior Audit มาแล้ว 3 ปี จากการที่ได้ร่วมงานกับ Barnes และ Fischer มา 5 ปีแล้ว งานแรกของคุณคือเป็นผู้จัดการฝ่ายตรวจสอบบัญชี ที่ช่วย Audit Partner ในการตัดสินใจรับงานสอบบัญชี Partnerได้อธิบายให้ทราบถึงสิ่งที่ลูกค้าคาดหวังว่าบริษัทเป็นผู้ผลิตขนาดกลางเกี่ยวกับเครื่องใช้ภายในบ้านเล็กๆ เมื่อเร็วๆนี้Partnerได้พบกับประธานบริษัทที่ห้องประชุมท้องถิ่น ประธานชี้ให้เห็นว่าหลังจากการประชุมบริษัทได้ตัดสินใจที่จะยุติความสัมพันธ์กับผู้สอบบัญชีในปัจจุบัน ประธานอธิบายถึงเหตุผลหลักที่ยุติการสร้างความสัมพันธ์กับบริษัทตรวจสอบบัญชีรับอนุญาตแห่งชาติ เพราะบริษัทวางแผนที่จะเสนอขายหุ้นส...
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...Case 1.1 Ocean Manufacturing, Inc.: The New Client Acceptance Decision Ocean Manufacturing, Inc. is recommended as a prospective audit client of Barnes and Fischer, LLP. I believe that Barnes and Fischer should accept the client because of Barnes and Fisher's opportunities in consulting and information technology (IT) development, Ocean Manufacturing, Inc.'s sound management/business model and past successful audits, and primarily, the growth potential of Ocean Manufacturing, Inc. following its planned IPO. Ocean Manufacturing has a favorable market position in the Home Appliance Industry. This is a market that Barnes and Fisher has not focused on and would be an "excellent opportunity for Barnes and Fischer to enter a new market." In addition to entering a new market, Barnes and Fisher would have multiple opportunities for consulting regarding Internal Controls and also in IT Development. Ocean wants advice and guidance for the IPO and troubleshooting its IT system. Barnes and Fisher's local IT Team is "confident they will be able to diagnose Ocean's Control Weaknesses and help Ocean overcome current difficulties." Currently, Ocean Manufacturing Inc. is not Publicly Traded, therefore, its Audit and Internal Controls have been more relaxed but still in accordance with PCAOB. Until the IPO occurs, Barnes and Fischer will be able to offer consulting advice, and according to the PCAOB, will be allowed to engineer the IT Control system after the IPO. The previous...
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...an engagement for audit. Barnes Fischer’s is an auditing company which will investigate Ocean Manufacturing and upon evidence will decide whether to accept them as a client or not. Ocean Manufacturing, Inc. Ocean Manufacturing, Inc. is a small- to medium- sized company which manufactures home appliances such as toasters, blenders, and trash compactors. In the past few years the company used to supply with moderate products at an affordable prices. The company sells its products to small retail stores at small quantity. And it only operates nationwide. However, the company is planning to be listed in NASDAQ and want their financial statements to be audited by a professional accounting firm. Internal Control of Ocean Manufacturing, Inc. Cash and Account receivables control According to the case study, Ocean Manufacturing has high accounts receivables, and if high accounts receivables it means most of the company cash in wedged in receivables account. In addition to that, Ocean Manufacturing staffs are also frustrated because they said that receivables billings are often late and inaccurate. This information strongly tells that the company’s receivables control is very weak. However, this affects the cash control, thus weak cash control can lead to liquidity problems in the company whereby, company will face shortage of cash to meet its short term obligations. Inventory control Ocean Manufacturing’s accounting and control system have problems in tracking the inventory. In...
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...ABAIKAN PERTANYAAN YANG ADA DI FILE KASUS (HAL. 7) (REQUIRED) 1. The client acceptance process can be quite complex. Identify five procedures an auditor should perform in determining whether to accept a client. Which of these five are required by auditing standards? 2. What nonfinancial matters should be considered before accepting Ocean as a client? Howimportant are these issues to the client acceptance decision? Why? 3. Using Ocean’s financial information, perform the following analytical procedures in order to gather valuable planning information. You can use spreadsheet, and be sure to turn in a printout of your work: (a) Change Analysis. Calculate the dollar and percentage increase or decrease in the various balance sheet and income statement account balances between the fiscal years ended 2007 and 2008. Use the following column headings: Per Per Audit Books Dollar Percent 12-31-07 12-31-08 Change Change Index your working paper PL-1. (b) Common Size Financial Statements. From the figures found on the income statement working trial balance, calculate sales returns and expense accounts as a percentage of gross sales for the years 2007 and 2008. Use the following four column headings: Per 2007 Per 2008 Audit Percent of Books Percent of 2007 Gross Sales 2008 Gross Sales Index your spreadsheet working paper PL-2. (c) Financial Ratios. Calculate Ocean’s financial ratios to reveal any problem areas and be in a position to assess...
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...CASE 1.1 Ocean Manufacturing, Inc. The New Client Acceptance Decision [2] What nonfinancial matters should be considered before accepting Ocean as a client? How important are these issues to the client acceptance decision? Why? I believe the IT issues are important to consider but after speaking to Barnes and Fischer’s IT department they feel that diagnosing the weakness in controls that they should be able to handle the IT system being used. I also feel that the turnover is important but that this turnover was due to personal issues so this can also be disregarded. The fact that the company is considering IPO in the future would be a great investment in Barnes and Fischer to broaden the industry representation. I believe these are all very important when deciding to represent this company. [5] [a] 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 nonfinancial issues to justify your recommendation. See first memo [b] 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...
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...s e c TIo n client acceptance C a s es inC lu de d in t his se Ction 1 3 1.1 Ocean Manufacturing, Inc. . . . . . . . . . . . . . . . . . . . . . . The New Client Acceptance Decision InsTrucTor resource Manual — Do noT copy or reDIsTrIbuTe InsTrucTor resource Manual — Do noT copy or reDIsTrIbuTe ocean Manufacturing, Inc. The new client acceptance Decision ins tr uC t ional o b je C t ive s [1] To c a s e 1.1 Mark S. Beasley · Frank A. Buckless · Steven M. Glover · Douglas F. Prawitt help students understand the process of considering a new prospective audit client and the factors that auditors commonly consider in making the acceptance decision. [2] To give students experience in computing and interpreting preliminary analytical procedures commonly used in obtaining an understanding of a prospective client during the client acceptance decision process. [3] To raise issues relating to auditor independence in the context of client acceptance, both in terms of financial interests and the provision of non-audit services. To illustrate the subjective and sometimes difficult nature of the judgments involved in the client acceptance decision, and to give students the opportunity to justify a recommendation on client acceptance in the presence of both significant positive and negative factors. [5] To help students understand how information gathered in the client acceptance process can help the auditor in planning the audit if the client...
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...5A. MEMORANDA Barnes and Fischer should not accept Ocean Manufacturing, Inc., because the risks associated with this client outweigh the benefits of accepting the engagement. We feel as though, after a conducting a thorough investigation on Ocean, accepting the client would elevate our engagement risk—which could ultimately harm our firm. The risks associated with this client include: Ocean Manufacturing has had problems with their auditors. Over the past 12 years Ocean Manufacturing switched auditors three times and had problems agreeing on auditing fees. The previous auditor had two major problems with Ocean: Ocean’s complex IT system and managements’ tendency to aggressively reflect year-end accruals and revenue in order to meet creditor requirements. In addition, there have been many problems with tracking and recording transactions that occur within the entity. All of these are risk factors can lead to known or likely material misstatements being present within the company’s financials, and ultimately they the potential to cause engagement complications. Judging from the past, if we ask Ocean to change or alter any aspects regarding their business, it is likely they will drop our firm’s services and search for another auditor. There have also been problems related to Ocean’s management: The previous Controller, who poorly managed the company’s IT system, resigned from the company; the present Controller lacks the experience the company needs; and the Vice-President...
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...The Strategic Move of Crocs, Inc. By Jennifer von Briesen, Founder & Principal, Frontier Strategy, LLC Crocs, Inc. Overview Crocs, Inc. is a U.S. based shoe designer, manufacturer, and retailer that launched its business in 2002 selling Crocs™ brand casual plastic clogs with straps in a variety of solid, bright colors. Love them or hate them, the tremendous popularity of Crocs™ shoes is an undeniable business success story. Crocs’ bold strategic move allowed it to break out of the red ocean and achieve both differentiation and low costs to create a blue ocean. The result was rapid growth and global expansion to reach US$847 Million in revenues and US$168 Million of profits in 2007, just six years after launch. Crocs store in Boston, MA. © J. von Briesen, Frontier Strategy, LLC (2009) Unfortunately, after that, instead of remaining true to the principles of blue ocean strategy, Crocs started to compromise on the very foundation that made it a success. It lost its focus on a few simple styles and started offering a wide range of complicated styles and expanded too aggressively. The result was declining performance and higher costs. In the rest of this article, the story of Crocs’ strategic move will be explained and will conclude with some perspectives on the company’s current situation. Crocs Entered A Red Ocean Industry When It Launched in 2002 The U.S. footwear industry in 2002 was $49.3B in annual sales1, split about 60%-40% between fashion and...
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...Ocean Manufacturing, Inc. 1. The auditor is to do the following: a. Communicate with the previous auditor to discuss the details of how the previous audits went and inquire about management integrity. b. Take any steps necessary to obtain an understanding of the client and its industry and determine if the auditor is capable of performing the audit properly. c. Ensure that the auditor is independent of the client. d. Evaluate the integrity of the client’s management. e. Obtain and analyze all of the client’s financial data by performing analytical procedures. The aforementioned steps are all requirements by auditing standards. Standards used: AS 12 paragraph 5, AU 150 General standards, AU 311 Paragraphs 3 and 4. 2. Analyzing financial data: f. The ROE for Ocean is 8.9% whereas the industry average is 20.33%. This raises concern because it is well below even half the industry average. g. The profit margin for Ocean is 2.4% whereas the industry average is 10.58%. This raises concern because it is a fraction of the industry average. This is an issue because if cost of goods sold increases for any reason, it may make the margin too thin. h. The ROA for Ocean is 4.5% whereas the industry average is 6.62%. This raises concern because it is well below the industry average, showing that management isn’t very efficient in the use of its’ assets. 3. Non-financial data: i. Ocean has had a high turnover...
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...RATIONALIZATION Table of Contents COMPANY BACKGROUND AND ISSUES COMPANY HISTORY DECISION STATEMENT PORTFOLIO RATIONALIZATION 2 6 7 SOLUTIONS MARKET STRATEGY ALTERNATIVES CRITERIA FOR SELECTION & ANALYSIS RECOMMENDATION LIBERATOR & SEXUAL WELLNESS IMPLEMENTATION ISSUES 12 16 20 21 24 BIBLIOGRAPHY 25 APPENDICES EXHIBIT 1: Liberator, Inc., Revenue Details EXHIBIT 2: LOGOS 26 27 1 HISTORY A gentleman is sitting in the waiting area of a hair salon reading a magazine while his wife gets her hair cut. The article he’s reading is about using pillows to increase satisfaction during love-making, and he thinks to himself, “Yes, but ordinary pillows go flat, and move around too much. What if there was a cushion that kept its shape and stayed in place?” Thus, the seed of an idea was planted, and after some research and a lot of testing, the Liberator Sexual Positioning cushions were developed. Men and women rejoiced all around the world, and the gentleman became their hero. Or, so the story goes….. The story is mostly true, and that gentleman was Louis Friedman, founder and CEO of the company now known as Liberator, Inc., a vertically integrated manufacturer that designs, develops, manufactures, markets, distributes and retails products to enhance intimacy. Mr. Friedman founded the company under the name OneUp Innovations in 2000; his wife joined the company as Secretary and Treasurer, and a business partner began to pitch the product idea to potential customers. Operating...
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...Ocean Manufacturing Inc. - The New Client Acceptance Decision What non-financial matters should be considered before accepting Oceans as a client and why? - Most of Barnes and Fischer’s audit clients are in the healthcare services industry and the company has never had a client in the small appliances industry. The engagement presents an excellent opportunity for the company to enter a new market and expand its reputation, especially if Ocean goes public in the future. However, auditors need to examine whether they have the required professional competence to provide the service since the company has no previous experiences in the industry. - Ocean is planning to go public and expand aggressively national markets. There are many hints throughout the case that management is willing to aggressively manipulate its financial statements in order to achieve better results. With the plans of an IPO, the risk of manipulation is even greater. According to SEC, auditors are liable for third party losses if there is false or misleading information in the audited statements in an IPO. Thus, a great deal of attention should be paid on this issue in order to avoid information risk and legal risk. - The auditee’s relationship with its previous auditor seems suspicious. Even though management of Ocean claimed that the dissolution of the relationship was due to lack of understanding of Ocean’s business environment, the company should still be concerned. Ocean was hesitant to permit the company...
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