Audit and Client Acceptance
Client Acceptance
1
C a s es inc lu de d in t his Se ction
1.1 Ocean Manufacturing, Inc.
The New Client Acceptance Decision
Instructor Resource Manual — Do Not Copy or Redistribute
. . . . . . . . . . . . . . . . . . . . . .
3
Instructor Resource Manual — Do Not Copy or Redistribute
Ocean Manufacturing, Inc.
C a s e
1.1
The New Client Acceptance Decision
Mark S. Beasley · Frank A. Buckless · Steven M. Glover · Douglas F. Prawitt
INS TRUCTIONAL O b je c t ive s
[1] To
help students understand the process of considering a new prospective audit client and the factors that auditors commonly consider in making the acceptance decision.
[2] To give students experience in computing and interpreting preliminary analytical procedures commonly used in obtaining an understanding of a prospective client during the client acceptance decision process.
[3] To raise issues relating to auditor independence in the context of client acceptance, both in terms of financial interests and the provision of non-audit services.
To illustrate the subjective and sometimes difficult nature of the judgments involved in the client acceptance decision, and to give students the opportunity to justify a recommendation on client acceptance in the presence of both significant positive and negative factors.
[5] To help students understand how information gathered in the client acceptance process can help the auditor in planning the audit if the client is accepted.
[4]
KEY FACTS
The student takes on the role of a newly promoted audit manager recently given the task of considering factors and making a recommendation with respect to the acceptance of a new prospective client. The request to consider the engagement was received two weeks past the client’s fiscal year-end.
The accounting firm, Barnes and Fischer, LLP, is a medium sized national firm with over 6,000 professionals on the
1
C a s es inc lu de d in t his Se ction
1.1 Ocean Manufacturing, Inc.
The New Client Acceptance Decision
Instructor Resource Manual — Do Not Copy or Redistribute
. . . . . . . . . . . . . . . . . . . . . .
3
Instructor Resource Manual — Do Not Copy or Redistribute
Ocean Manufacturing, Inc.
C a s e
1.1
The New Client Acceptance Decision
Mark S. Beasley · Frank A. Buckless · Steven M. Glover · Douglas F. Prawitt
INS TRUCTIONAL O b je c t ive s
[1] To
help students understand the process of considering a new prospective audit client and the factors that auditors commonly consider in making the acceptance decision.
[2] To give students experience in computing and interpreting preliminary analytical procedures commonly used in obtaining an understanding of a prospective client during the client acceptance decision process.
[3] To raise issues relating to auditor independence in the context of client acceptance, both in terms of financial interests and the provision of non-audit services.
To illustrate the subjective and sometimes difficult nature of the judgments involved in the client acceptance decision, and to give students the opportunity to justify a recommendation on client acceptance in the presence of both significant positive and negative factors.
[5] To help students understand how information gathered in the client acceptance process can help the auditor in planning the audit if the client is accepted.
[4]
KEY FACTS
The student takes on the role of a newly promoted audit manager recently given the task of considering factors and making a recommendation with respect to the acceptance of a new prospective client. The request to consider the engagement was received two weeks past the client’s fiscal year-end.
The accounting firm, Barnes and Fischer, LLP, is a medium sized national firm with over 6,000 professionals on the