Premium Essay

Ocean Manufacturing Case 1.1

In: Business and Management

Submitted By nmrichardson
Words 1179
Pages 5
1. Five procedures an auditor should perform in determining whether to accept a client. a. The firm’s independence in fact and in appearance. (required) b. Qualifications of the firm to undertake the engagement. c. Management of the reporting entity is honest and not involved in illegal acts. (required) d. The client’s financial reporting system, and internal control system, will provide fairly presented financial statements. e. Communicate with the previous auditor after receiving permission from the client. This can be found in AU315. (required)

2. Ratios
Return on Equity
2011 2010 2009 8.94 7.11 6.28

Return on Assets 2011 2010 2009 4.54 3.77 3.39

Assets to Equity
2011 2010 2009
1.97 1.88 1.85

Accounts Receivable Turnover
2011 2010 2009
11.69 13.11 14.02

Average Collection Period
2011 2010 2009
31.23 27.85 26.03

Inventory Turnover
2011 2010 2009
6.08 4.51 3.47

Days in Inventory
2011 2010 2009
59.9 80.88 104.98

Debt Ratio
2011 2010 2009
.49 .47 .46

Debt to Equity Ratio
2011 2010 2009
.97 .88 .85

Times interest earned
2011 2010 2009
4.7 4.24 6.23

Current ratio
2011 2010 2009
1.85 1.91 1.69

Profit margin
2011 2010 2009 5.5 6.0 4.7

Differences to be aware of: 1. Low return on equity in comparison. 2. Low return on assets in comparison. 3. Accounts receivable is high in comparison. 4. Inventory turnover is low in comparison. 5. The profit margin is low in comparison.

3. Nonfinancial matters to consider A. Management turnover. There could be disagreements with ethical matters, which are causing managers to leave. B. The accounting and control systems are complicated. The transition hasn’t gone smoothly, staff still needs to be retrained, and there are problems with documentation of inventory,...

Similar Documents

Premium Essay

Case 1.1: Ocean Manufacturing, Inc.

...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....

Words: 1881 - Pages: 8

Premium Essay

Case

...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 The New Client ......

Words: 447 - Pages: 2

Premium Essay

Elegance

...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...

Words: 875 - Pages: 4

Premium Essay

Case 1.1

...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....

Words: 4495 - Pages: 18

Premium Essay

Ocean Manufacturing

...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....

Words: 265 - Pages: 2

Premium Essay

Ocean Manaufacturing Assignment

...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....

Words: 814 - Pages: 4

Premium Essay

Ocean Manaufacturing 1.1

...In this case, technology services could be viewed as financial information services or expert services. [b] Independence rule 101 states that a partner or employee may not hold more than 5% and the partners holdings are just over half of one percent. Therefore, this is not a violation of the AICPA code...

Words: 581 - Pages: 3

Premium Essay

Strategic Management of Tenfold Organic Textile

...MGW3401 – STRATEGIC MANAGEMENT Tenfold™ Organic Textile Case Analysis Report Lecturer: Dr Chong Yit Sean, Esther Tutor: Dr Tan Seow Kian, Sharon Cheok Huei Chun (24826200) Teoh Tong Aik (26094193) Florian Navintach Zeorelli Samerawickreme (24729833) Clement Marsha (25342754) Habiba Almahrooqi (25384589) Table of Contents Executive Summary 1.0 Introduction 1.1 Purpose of the report 1.2 Company information 1.3 Assumption 1.4 Methodology 1.5 Purpose of Report 2.0 Strategic Analysis 2.1 SWOT ANALYSIS 2.1.1 Strengths 2.1.2 Weaknesses 2.1.3 Opportunities 2.1.4 Threats 2.2 Main issues 2.2.1 Issue 1 2.2.2 Issue 2 3.0 Evaluation of Alternative Strategies 3.1 Alternative 1 3.2 Alternative 2 4.0 Implementation 5.0 Conclusion 6.0 Reference list 7.0 Appendix  Executive Summary Tenfold™ Organic textile is a company that provides naturally dyed organic cotton products to consumers, manufacturers and retailers. Tenfold attracts its customers by being an environmentally responsible organization that produce apparel using eco-friendly and chemical-free dye. The purpose of this report it to analyze the strengths, weakness, opportunities and threats of Tenfold in order to address the main issues that the company can improve. Furthermore, using academic journals, two alternative strategies will be discussed to improve and enhance the organization’s strategic position....

Words: 3701 - Pages: 15

Premium Essay

Cranberry Industry

...Ocean Spray and other growers have unleashed a steady flow of new products, including new low-calorie drinks such as Diet Ocean Spray. The company has also introduced a line of “Grower’s Reserve” 100% natural juices, including a “Super Antioxidant” variety with blueberry, pomegranate, and cranberry juices. Last year Ocean Spray has its most successful year ever, posting $2 billion in revenue with 30% from outside the U.S. [1] Ocean Spray Cooperative has one of the great success stories in agricultural marketing cooperatives. Over the past 80 years the company has struggled in several industry dynamics, pricing, supply, demand issues, and macroeconomic factors but has overcome and be a leader in manufacturing and agricultural products. Cultivated cranberry production can be traced back to the 1800’s when Henry Hull, a ship captain based in Cape Cod notices that wild cranberries flourished when sand blew over them. he transplanted vines to what he called “cranberry yards” and manually spread sand to encourage growth. This practice proved successful, and by the 1850s, cranberry production had expanded both on the Cape and into neighboring Plymouth County. The success spread to New Jersey, Wisconsin in the 1860’s and further west in 1885. By the end of the 19th century, cranberry growers through information asymmetry formed grower associations....

Words: 3060 - Pages: 13

Premium Essay

Timbuk2 Case - Term Paper

...Some numbers in this case were adjusted to simplify the case analysis and to protect confidential business information. The authors are grateful to Brennan Mulligan for his assistance in writing this case. Copyright © 2007 by Cachon, Cattani, and Netessine. 1 History and processes Timbuk2 was founded in 1989 by Rob Honeycutt, a San Francisco bicycle messenger with an old sewing machine. The...

Words: 4168 - Pages: 17

Premium Essay

Tata Nano

...TABLE OF CONTENTS 1 ENTRY TO GLOBAL ULTRA LOW COST MARKET 4-5 1.1 A DREAM COME TRUE 1.2...

Words: 3698 - Pages: 15

Premium Essay

Value of Business Organization in Society

...Introduction 1.1. What is business? 1.2. Forms of business 2.0. Negative effect/impact of business. 3.0. Conclusion 4.0. References 1.0. Introduction The role and impact of business organizations in any society can be aggrandized to be a major factor leading to the growth and development of economy in various countries across the globe. Business as a human activity has been able to assemble people, capital and innovation under controlled risk-taking, in order to create jobs and produce goods and services profitably which translated to an amount of wealth for business owners, employees, customers and society at large. In Africa, business activities have tremendously contributed to the economic growth experience and these has been boosted by internal and external factors. Internally, the emphases on business organization to create domestic business friendly environments, greater business discipline, have formally written values and principles, and open prospect to transact business globally has led to the growth of the African economy. However, the role and impact of business activities also have negative effects on the society which will be discussed and properly elaborated. 1.1. What is business?...

Words: 1602 - Pages: 7

Free Essay

Break Bulk Cargo

...Since direct loading and direct delivery are the rule in such cases, loading and unloading are coordinated with the vessel's cargo handling schedule. Therefore it is necessary to fully coordinate matters with all concerned beforehand. In shipping the term Break bulk derives from the phrase breaking bulk  Break bulk products are mainly steel, lumber and wood. Before containers, goods were shipped in individual boxes, barrels, bales, bags, crates and many other methods of enclosing goods for a long sea voyage. Each item had to be manhandled, making the job of loading and off-loading cargo one of the most labour intensive of the maritime trades. The storage of items in the holds was a specialised business, not only for the preservation of the cargo, but to ensure that the ship was not subject to the shifting of cargo in transit, a dangerous situation for any vessel. The...

Words: 2261 - Pages: 10

Premium Essay

Tdmt Report

...Lamp Place Incorporated Logistics Plan | Prepared for Scott Bennie - TMDT 1150 & James Peterson - COMM 2200 | April 10, 2011 Tom (Zaiyi) Liu INTT 2A | Executive summary Our consulting firm has been hired to assist Lamp Place Incorporated (LPI) with a product roll out in Canada. LPI wants to test the viability of the Canadian market by introducing a Prestige line of lamps. Previously, the lamps are being produced by an Indian supplier, who ships four containers of lamps (1,536 cartons) on a weekly basis to the Port of Halifax. After the arrival of these containers at the Port of Halifax, the lamps are then transferred to each of the LPI’s contracted distribution centres through rail and truck. The total cost of this whole process is $24,439 per week, or $1,270,815 per year. Currently, a new supplier based in Montreal has been identified as a comparable alternative to the India supplier. The Montreal supplier offers the same product with $8.10 higher unit price. But the transportation costs are significant lower, as it only costs LPI $11,000 per week and $572,000 per year. One thing to note is that, the Montreal supplier uses a 53’ container to transport the product; therefore, there will be a possibility of 100 more lamps to be shipped with every container. After an analysis both of the suppliers of their cost, convenience,......

Words: 1893 - Pages: 8

Premium Essay

Knowledge Economy

...In among these 2 million there are about 400000 are form manufacturing side about 600000 from services side enterprises and about one million are exists from trade sector mean retailers. In Pakistan Small Medium enterprises is almost near to ninety percent of the whole business enterprise. It contributes a lot in almost every sector of Pakistan like manufacturing, agricultural and services based organizations. The part of every province in SME are contributed in SME Punjab province has the highest contribution about 65.26% share is in Punjab, KPK has about 12.21% while Sindh province has about 17.82% share in SME in total of 2.96 million units in Pakistan of which about 93.9% are established enterprises and 6.1% are household enterprises. Baluchistan share is about 2.09% in over all units in Pakistan. All sectors are very important in SME but manufacturing sector is very important in SME in context to the economic development. Manufacturing sector has about 66.5% of shares in SME which is the highest one in over all sectors in Pakistan. Other is household, wholesale; retail or restaurants, agriculture farming and poultry sectors are also contributing in SME. Main problems that are faced...

Words: 3177 - Pages: 13