Ocean Manufacturing, Inc.: The New-Client Acceptance Decision REQUIREMENTS 1. The client acceptance process can be quite complex. Identify five procedures an auditor should perform in determining whether to accept a client. Which of these five are required by auditing standards? 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 tot industry ratios provided. Identify any major differences. 3. What nonfinancial matters should be considered before accepting Ocean as a client? How important are these issues to the client acceptance decision? Why? 4. a. Ocean wants Barnes and Fischer to aid in developing and improving their IT system. What are the advantages and disadvantages of having the same AICPA independence rules, will Barnes and Fischer be able to help Ocean CPA firm provide both auditing and consulting services? Given current with their IT system and still provide a financial statement audit? b. As indicated in the case, one of the partners in another office has invested in a venture capital fund that owns shares of Ocean common stock. Would this situation constitute a violation of independence according to the AICPA Code of Professional Conduct? Why or why not? 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 accep- tance and be sure to address both financial and nonfinancial issues to jus- 5. a. Prepare tify your recommendation. 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. Be sure to indicate specific ways in which the audit firm should tailor its approach based on the factors you identify U, Ull Call: the balance Dayable as follows: Juuscbed for 4,800 shares and allotment was made in full. One shareholder holding 25 shares ta failed to pay the allotment and calls Pass journal entries. Illustration 7 B Ltd issued 2,000 shares of 100 each at a premium of 10% payable as follows: On application 20 (1st Jan. 2012), On allotment 40 (including premium) (1st Apri 2012). On First Call 30(1st June 2012). On Second& Final call ' 20 (1st Aug 2012). Applications were received for 1,800 shares and the directors made allotment in full. One shareholder to whom shares were allotted paid the entire balance on his share holding not pay allotment and 1st call money on his 60 shares but which he paid with final call Required: Calculated the amount of interest paid and received on calls -in- advance and calls in arrears respectively on 1st Aug. 2012 s with allotment money and another shareholder did Page 1 of 2