Ocean Manufacturing Inc

Client Acceptance

1

C a s es inc lu de d in t his Se ction

1.1 Ocean Manufacturing, Inc.

The New Client Acceptance Decision

Instructor Resource Manual — Do Not Copy or Redistribute

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Instructor Resource Manual — Do Not Copy or Redistribute

Ocean Manufacturing, Inc.

C a s e

1.1

The New Client Acceptance Decision

Mark S. Beasley · Frank A. Buckless · Steven M. Glover · Douglas F. Prawitt

INS TRUCTIONAL O b je c t ive s

[1] To

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 is accepted.

[4]

KEY FACTS

ƒƒ The student takes on the role of a newly promoted audit manager recently given the task of

considering factors and making a recommendation with respect to the acceptance of a new

prospective client. The request to consider the engagement was received two weeks past the

client’s fiscal year-end.

ƒƒ The accounting firm, Barnes and Fischer, LLP, is a medium sized national firm with over 6,000

professionals on the...