Oxford Manufacturing, Inc. is an audit case designed to introduce you to parts of the audit process. You are asked to assume the role of a veteran of two-to-three busy seasons, incharging for the first time. While Oxford Manufacturings growth has been phenomenal (there has been a dramatic growth in unaudited net income over the past year), there are some concerns: the client doesnt want your firm (Dewey, Cheatem & Howe (DCH)) to talk with the predecessor auditor, a labor strike is looming, and one of Oxford Manufacturings largest customers is suffering some financial difficulties. Because of busy season, there is little help, other than from an untrained intern. While the intern can do grunt work, such as vouching and gathering information for you, he appears incapable of preparing working papers (WPs), making adjusting entries, or even getting good coffee and doughnuts. Assistance does come in the form of an objective, competent internal audit staff. Communication between client personnel and other firm members takes the form of e-mail messages and memos from the engagement partner (Artie Andresson), the engagement manager (Danielle Woodlaw), the intern (Bentley Bumbler), and the director of Oxfords internal audit department (Katrina Rodrigues). You (actually your group) are the staff accountant on the Oxford Manufacturing audit engagement. Assume that DCH and Oxford have signed an engagement letter and all audit plans/programs have been prepared by Danielle Woodlaw, the engagement manager. Danielle has sent you the following memo asking you to perform some preliminary procedures using Oxfords trial balances for 2018 and 2019. Your tasks are listed below.

1. Perform preliminary analytical procedures on the financial statements. a. Perform horizontal (year-to-year changes) and vertical (common size financial statements) analyses using the provided trial balances. b. Calculate appropriate financial ratios. Assume the market value of the common stock is $24 million in both the current and prior years. (10 points)

2. Write a memo (labeled GA-4) highlighting what you believe are potential problem areas. In other words, are there any significant changes from year-to-year that we might need to investigate further, or does anything jump out at you? Include printouts of your calculations from 1. above as support and label them GA-4-1, GA-4-2, etc. (Youre using GA-4 because other auditors have included other documents in the working paper file already GA-1, -2, and -3.) (15 points)