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Oceans Case

In: Business and Management

Submitted By aubreybratcher
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Case 1.1

1) Five procedures an auditor should perform in determining whether to accept a client are an independence check, checking management integrity, the nature of disagreements, communication with previous auditor, and reason for auditor change. Communicating with the previous auditor, evaluating management integrity and the independence check are required by the auditing standards.

3) The following non-financial should be considered before accepting Ocean as a client are a high auditor turnover rate should be a major red flag and should be looked into. Also the new complicated computer system could effect the auditor getting all the information in a timely manner. There might be inadequate controls over the new system requiring more substantive tests. There is also a VP with a gambling problem and a new controller. Some of the non financial decisions are more important to consider than others. Like for example the fact that the client was hesitant to allow communications between auditors. This could be a cover up for a reason not to accept the client.

4) a) Barnes and Fischer will be able to provide help with the IT and financial statements audit according to the AICPA as long as they merely help implement and don't design the software.

b) The situation doesn't violate the AICAP. This is because of rule 101 of the AICPA which says materiality is not to bw considered in a case of direct financial interest on the part of the auditor. If indirect like this case then materiality is considered but it is clear his interests are…...

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