Informative Essay on Ocean Manufacturing

Informative Essay on Ocean Manufacturing.
Barnes and Fischer, LLP| To:| Jane Hunter| From:| Susan Anderson, Elizabeth Lane, Chantal Murphy, Elizabeth Robinson| CC:| Dr. Cashell| Date:| 3/5/2013| Re:| Decision on Accepting Ocean Manufacturing as a client| | Recommendation: We recommend that we do not accept Ocean Manufacturing as a client. Justification:There were several issues we considered when making our recommendation:0Independence Violation0No experience in the industry0Can’t do consulting because SOX violation0Red flag with regard to contact to previous auditor0Significant Mgt.
Turnover0Unethical behavior (illegal gambling)03 years ago received qualified opinion0Aggressively accounting to meet creditor’s requirements0New accounting system0Audit trails not kept in tactFirst, we considered possible GAAS and GAAP violations. When reviewing Ocean Manufacturing’s background information, we found that a partner in the Salt Lake City office owns shares in a venture fund which holds a private equity investment in Ocean common stock. This is an independence violation which goes against the second general standard of GAAS.
Another GAAS violation could be considered because we have a background in the healthcare service industry and Ocean Manufacturing is in the appliance industry. Since we do not have training in this field, we would be violating the first general standard of GAAS. There is also a SOX violation because Ocean Manufacturing would like us to do consulting and help prepare for the IPO. They also would like us to work with their IT program. This goes against the rules of GAAP.

Since they are getting ready to offer an IPO we would be faced with higher litigation risk. Ocean Manufacturing also has various management issues that have raised red flags. The company has experienced high management turnover, which could be an indication of how the company is run on a daily basis. When the vice-president of Ocean was approached to discuss the previous auditor, he was hesitant to talk about the previous audit firm. If a potential client is even hesitant to allow engagement with prior auditor, this is not usually a good sign.
Also, when the client background check was conducted, it was discovered that the vice-president of finance was involved with illegal gambling in the past, which could be an indication of his lack of ethics. This behavior could carry over to unethical behavior in the company since the leaders set the tone of the company which in turn reflects a higher litigation risk. There were also issues with the company’s financial statements. Three years ago Ocean Manufacturing received a qualified report from their auditor.
Ocean’s previous auditor told us their problems with Ocean primarily related to management reflecting their revenue and accruals aggressively in order meet creditors’ requirements and the complexity of Ocean’s new IT system. When reviewing their control systems, we noticed a few issues. Ocean Manufacturing’s audit trails were not kept intact due to system failures and errors. There are also system failures when it comes to their new accounting system. There are problems in inventory tracking and cost accumulation, receivable billing and aging, payroll tax deductions, payables, and balance sheet account classifications.
This could also explain some of the aspects of the financial statements that appeared to be off compared to previous years. Ocean’s accounts receivable, accounts payable, and accrued expenses appear to be much greater than the changes in the year before. This could also be because of the aggressive accruing that was discussed earlier. In conclusion, we feel that the issues with auditing standards, management, and financial statements are good enough indications as to why we should not accept Ocean Manufacturing as a client. |

Informative Essay on Ocean Manufacturing

superadmin (28431)
New York University

Hire an Expert to Help you

Hire Verified Expert

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
The price is based on these factors:
Academic level
Number of pages
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more
Have a homework question? Get help from verified tutors now!

Are You Looking For Assignment Help? We Can Certainly Assist You