...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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...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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...Ocean Manufacturing, Inc. The New Client Acceptance Decision Table of Content Step 1: Client Acceptance Decision Process......................................................................... p. 3 Step 2: Knowledge Acquisition of current Conditions: Preliminary Analytical Procedures....................................... p. 4 Step 3: Nonfinancial Matters when Accepting a Client....................................................... p. 5 Step 4: Recommendation whether to Accept or Decline Ocean as an Audit Client.. .......... p. 6 Step 5: Important Risk Areas and Factors ........................................................................... p. 7 Step 1: Client Acceptance Decision Process Barnes and Fisher needs to decide whether it will accept the auditing request of Ocean Manufacturing Inc. or not. In the process of the client acceptance decision five steps are necessary in order to come to a result. The first step of this process is to gain information about client’s company background. Ocean Manufacturing Inc. is a home appliances company, offering products like toasters, blenders, and trash compactors. It is currently considering an Initial Public Offering (IPO) within the next five years in order to increase current capital to be able to continue expansion and growth in the upcoming years. In the last 12 years it has been audited by 3 different auditors and wants Barnes and Fisher to audit its company for the year 2011. Barnes and Fisher, a national...
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...Acct 4080Ocean Manufacturing Case1.1) Obtain and review financial information about the prospective client: annual reports, interim statements, registrations statements, Form 10-k’s, and reports to regulatory agencies.2) Detailed criminal background checks of senior managers.3) Evaluate the public accounting firm’s independence with regard to prospective clients.4) Inquire of the prospective clients’ bankers, legal counsel, underwriters, analysts, or other persons who do business with the entity for information about the entity and its management.5) Consider the need for individuals possessing special skills or knowledge to complete the audit (e.g., IT auditor, valuations specialist, industry specialist)2. Overall, after calculating a few of Ocean Manufacturing ratios and comparing them with the industry, the company’s figures are not performing up to others in the industry. ROE = NI/Stockholder Equity (2011,2010)= 8.9% and 7.1%ROA = NI/Assets= 4.5% . 3.8%Both return on equity and assets are lower than industry ratios but are improving.Accounts Rec Turnover—could not calculate without % of credit sales from cash sales. Profit Margin = Operating income/ Sales(rev) = 5.5%, 6.0%PM are also low compared to the industry average. 3. There are a few non-financial items the company should consider. a) The VP of finance was charged with a misdemeanor related to illegal gambling. Raises questions about the tone at the top and the integrity of management. b) The company is struggling...
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...Acct 4080 Ocean Manufacturing Case 1. 1) Obtain and review financial information about the prospective client: annual reports, interim statements, registrations statements, Form 10-k’s, and reports to regulatory agencies. 2) Detailed criminal background checks of senior managers. 3) Evaluate the public accounting firm’s independence with regard to prospective clients. 4) Inquire of the prospective clients’ bankers, legal counsel, underwriters, analysts, or other persons who do business with the entity for information about the entity and its management. 5) Consider the need for individuals possessing special skills or knowledge to complete the audit (e.g., IT auditor, valuations specialist, industry specialist) 2. Overall, after calculating a few of Ocean Manufacturing ratios and comparing them with the industry, the company’s figures are not performing up to others in the industry. ROE = NI/Stockholder Equity (2011,2010)= 8.9% and 7.1% ROA = NI/Assets= 4.5% . 3.8% Both return on equity and assets are lower than industry ratios but are improving. Accounts Rec Turnover—could not calculate without % of credit sales from cash sales. Profit Margin = Operating income/ Sales(rev) = 5.5%, 6.0% PM are also low compared to the industry average. 3. There are a few non-financial items the company should consider. a) The VP of finance was charged with a misdemeanor related to illegal gambling. Raises questions about the tone at the top and the integrity...
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...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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...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...
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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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...lakes, rivers, oceans, aquifers and groundwater). This form of environmental pollution occurs when pollutants are directly or indirectly discharged into water bodies without adequate treatment to remove harmful compounds. There are many contributing sources to water pollution however, the main sources can be categorised into three categories: Agricultural, Industrial and Municipal. The source of water pollution I decided to focus on is Plastic. Plastic is a perfectly engineered synthetic product. It is lightweight, strong, durable, cheap, and can be made into millions of different products (Laist, 1997). These properties have also made plastic an ecological disaster by promoting a single use throw away culture (Pruter, 1987). In Australia from 2010-2011 there was 1,433,046 tonnes of plastics used. From this 1,433,046 tonnes of plastic only 20% was recycled and 37% was for the manufacturing of single use disposable packaging (PACIA, 2011). The majority of Australia’s plastic water pollution affects our marine environment. Plastics are transported from populated areas to the ocean environment by rivers, wind, tides, rainwater, storm drains, sewage disposal, and even flood events. It can also reach the sea from vessels and offshore installations (Ryan, Moore, Van-Franeker & Moloney, 2009). Once in the oceans, plastic will float on the ocean surface, sink to the seafloor or end up on our beaches (Andrady, 2011). Three-quarters...
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...amenities, have humans failed to conserve and nurture nature’s gifts in the name of greed? In this paper, the subject to identify and discuss will be the effects that a growing human population may have on the marine ecosystem’s resources, including loss or harm to population of wild species; discuss one management practice of sustainability and conservation of natural resources in the marine ecosystem. Finally, the paper will identify is the risks and benefits of extracting or using one type of nonrenewable and one type of renewable energy resource from the marine ecosystem. From a distance in space humans look at this planet called Earth. Earth covers the massive blue oceans of life. Planet Earth humans call home consist of numerous types of land and marine species from the deepest part of the ocean to the clear shallow water of sandy beaches that lie within an ecosystem. The marine ecosystem is so complex but at the same time it is not complicated. Humans cannot see creatures with the naked eye but can spot a massive blue whale from a distance; this ecosystem is known as Marine Life. Many different species live in balance within the ecosystem; however, individual species cannot sustain life without the other. Humans have ruined the balance of life within the marine ecosystem, and as a result, the ecosystem may disappear or become extinct. As the human population expands, the consumption demands increase which...
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...Since bottled water does not last very long, it adds up to a bigger pile of trash (3). This is where landfills come into place and keep its trash forever. However, there is only so much land we can use to store our trash and keep it out of sight. This planet may seem huge but it is definitely not big enough to hold us and our billions of trash that we produce. Most of our worthless, empty bottled water ends up in the ocean besides on land. More specifically, it ends up in a placed called The Great Pacific Garbage Patch, which is a “collection of marine debris in the North Pacific Ocean” (“Great Pacific Garbage Patch”). The amount of debris accumulates because not all plastic are biodegradable, which includes bottled water. As mentioned earlier, the amount of sunlight beaming through the plastic containers allows the bottle to leach BPA and thus, release its dangerous toxins in the water. It is even worse when the ocean’s currents mix the toxic chemicals with the salt water, expanding its pollution. Although the size of the patch is unknown, many reports say it could be twice the size of the continental United States (“Great Pacific Garbage Patch”). As expressed, the amount of bottled water being thrown annually produces a major source of...
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...concern about the ocean pollution? Because everything in the world we use comes from the ocean in some way. The ocean provides us with everything we need like; the air we breathe, water we drink, food we eat, new medicines, climate, and products we use daily. Our ocean absorbs carbon dioxide from the atmosphere and maintain our climate change impacts. The ocean holds about 97 percent of the worlds water supply. Is it the largest ecosystem on earth and it provides most of the animal protein we eat. Researchers says that there’s is about 50-80 percent of life underwater, and only 5 percent of it has been explored. Leaving thousands of millions undiscovered species. Here are some various types of ocean pollution and does it affect our ecosystem. Oil Pollution An oil spill happens when a crude oil and a refined oil spill on lands and into the water. For example, trucks can be a major cause of oil spill, because they transport oil from one place to...
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...Plastic The age of plastic is upon us. Plastic is ubiquitous. In addition, it is in rivers, lakes, and oceans. In the ocean plastic drifts in currents called gyres. There are several gyres in the world’s oceans, majority older and a couple newly discovered. Some gyres move more slowly than others. Plastic floating in the ocean can take several years to wash up on a beach. Over time plastic breaks down into extremely minute pieces called nurdles or mermaids tears. Some plastic escapes the gyres, nevertheless, copious quantities are pushed inward creating garbage patches in the ocean. Some marine life cannot tell the difference between the plastic and their prey. This has been detrimental to sea creatures for years. Furthermore, plastic that breaks down release toxins creating significant issue for them. These toxins that are ingested by sea life than can be transferred to humans eating them. In this chapter, we learned the ocean is a gigantic garbage dump. Plastic objects are creating havoc. Why are we still manufacturing this product? We must start putting our foot down on these issues. Chapter Eleven: The Not So Silent World At one time, the underwater world of the ocean was a quiet place, however, that long ago changed with mankind and technology. Whales once produced the loudest sound in this underworld, however, this is no longer the case. Mans added noise to the ocean environment is hurting sea life that relies on sound for various aspects of life. It has already...
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...Ocean Manufacturing Case Solutions Acct 4080 Ocean Manufacturing Case 1. 1) Obtain and review financial information about the prospective client: annual reports, interim statements, registrations statements, Form 10-k’s, and reports to regulatory agencies. 2) Detailed criminal background checks of senior managers. 3) Evaluate the public accounting firm’s independence with regard to prospective clients. 4) Inquire of the prospective clients’ bankers, legal counsel, underwriters, analysts, or other persons who do business with the entity for information about the entity and its management. 5) Consider the need for individuals possessing special skills or knowledge to complete the audit (e.g., IT auditor, valuations specialist, industry specialist) 2. Overall, after calculating a few of Ocean Manufacturing ratios and comparing them with the industry, the company’s figures are not performing up to others in the industry. ROE = NI/Stockholder Equity (2011,2010)= 8.9% and 7.1% ROA = NI/Assets= 4.5% . 3.8% Both return on equity and assets are lower than industry ratios but are improving. Accounts Rec Turnover—could not calculate without % of credit sales from cash sales. Profit Margin = Operating income/ Sales(rev) = 5.5%, 6.0% PM are also low compared to the industry average. 3. There are a few non-financial items the company should consider. a) The VP of finance was charged with a misdemeanor related to illegal gambling. Raises...
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