the past few years. Most of the clients in the local office that is considering the acceptance of Ocean Manufacturing, Inc. are in the healthcare services industry. The prospective client, Ocean Manufacturing, is a medium-sized manufacturer of small home appliances, and is planning an initial public offering (IPO) in the next two years. The company has recently decided to terminate its relationship with its current auditor. The partner is intrigued with the idea of having a client in the home appliance industry. She believes the engagement may present an excellent opportunity for Barnes and Fischer to enter a new market. The case gives brief background information on the home appliances industry and Ocean's business environment, management team, selected financial statement accounts, and internal controls. Summary information is also provided on the predecessor auditor, independence issues, and client background checks. Ocean's financial statements are also included, together with some industry ratios