5(a) Prepare a memo towards the partner making a advice as to whether Barnes and Fischer should or should not recognize Ocean Developing, Inc. as an examine client. Thoroughly justify your role in light in the information in case. Include thought of reasons both for and against acceptance and stay sure to address both economical and nonfinancial issues to justify your recommendation.
To: Jane Hunter
Coming from: Corrine
Subject: Ocean Manufactory Should be Accepted
Date: Feb 3, 2012
Sea Manufacturing, a medium-sized producer of little home appliances, can be our prospective client. First, we should decide if to accept this kind of client. The purpose is to reduce the likelihood which our auditors will probably be associated with customers who lack integrity. We can reduce the risk that materials misstatements may possibly exist and not be discovered by the writer. Therefore , we have to investigate the customer and obtain selected information we need. The first thing to evaluate your customer is to consult with the precursor auditor. Your customer granted myself permission to make contact with the previous auditor and this individual indicated the difficulties the organization had with Ocean: (1) complexities and problems with Ocean's new THAT system
(2) management's propensity to strongly reflect year-end accruals in order to meet creditors' requirements As much as we know the company switched to a new system in 2011 as well as the transition for the system had not been well managed. The company was working to improve the system to make it better. Also, each of our local office's IT crew is fairly assured they will be in a position to diagnose Ocean's control weakness and help Ocean overcome current difficulties. Consequently , the system can be not an barrier for the firm to simply accept the client. To meet creditors' requirements, the administration inappropriately mirrored year-end accruals. The information shown on the integrity of management, which might be a risk for all of us to accept the consumer. According to the...