ocean manufacturing，Inc.
Ocean Manufacturing, Inc.
c as e
1.1
The new client acceptance decision
Mark S. Beasley · Frank A. Buckless · Steven M. Glover · Douglas F. Prawitt l ea r n ing o bje C t ive s
After completing and discussing this case you should be able to
[1] Understand
the types of information relevant to evaluating a prospective audit client
[2] List some of the steps an auditor should take in deciding whether to accept a prospective client
Identify and evaluate factors important to the client acceptance decision
[4] Understand the process of making and justifying a recommendation regarding client acceptance
[3]
INTRODUCTION
The accounting firm of Barnes and Fischer, LLP, is a medium-sized, national CPA firm. The partnership, formed in 1954, now has over 6,000 professionals on the payroll. The firm mainly provides auditing and tax services, but it has recently had success building the information systems consulting side of the business for non-audit clients and for audit clients that are not publicly traded. It is mid-January 2012, and you are a newly promoted audit manager in an office of Barnes and Fischer, located in the Pacific Northwest. You have been a senior auditor for the past three of your five years with Barnes and Fischer. Your first assignment as audit manager is to assist an audit partner on a client acceptance decision. The partner explains to you that the prospective client, Ocean
Manufacturing, is a medium-sized manufacturer of small home appliances. The partner recently met the company’s president at a local chamber of commerce meeting. The president indicated that, after some difficult negotiations, the company has decided to terminate its relationship with its current auditor. The president explained that the main reason for the switch is to build a relationship with a more nationally established CPA firm because the company plans to make an initial public offering (IPO) of its common stock within the next
c as e
1.1
The new client acceptance decision
Mark S. Beasley · Frank A. Buckless · Steven M. Glover · Douglas F. Prawitt l ea r n ing o bje C t ive s
After completing and discussing this case you should be able to
[1] Understand
the types of information relevant to evaluating a prospective audit client
[2] List some of the steps an auditor should take in deciding whether to accept a prospective client
Identify and evaluate factors important to the client acceptance decision
[4] Understand the process of making and justifying a recommendation regarding client acceptance
[3]
INTRODUCTION
The accounting firm of Barnes and Fischer, LLP, is a medium-sized, national CPA firm. The partnership, formed in 1954, now has over 6,000 professionals on the payroll. The firm mainly provides auditing and tax services, but it has recently had success building the information systems consulting side of the business for non-audit clients and for audit clients that are not publicly traded. It is mid-January 2012, and you are a newly promoted audit manager in an office of Barnes and Fischer, located in the Pacific Northwest. You have been a senior auditor for the past three of your five years with Barnes and Fischer. Your first assignment as audit manager is to assist an audit partner on a client acceptance decision. The partner explains to you that the prospective client, Ocean
Manufacturing, is a medium-sized manufacturer of small home appliances. The partner recently met the company’s president at a local chamber of commerce meeting. The president indicated that, after some difficult negotiations, the company has decided to terminate its relationship with its current auditor. The president explained that the main reason for the switch is to build a relationship with a more nationally established CPA firm because the company plans to make an initial public offering (IPO) of its common stock within the next