Ocean Manufacturing Essay

928 words - 4 pages

-Submit twice, by section
-Times New Roman 12
-6 page (1.5 lines)

Ocean Manufacturing, Inc.
The New Client Acceptance Decision
1. Type of information relevant to evaluating client
2. Steps in deciding whether to accept prospective client
3. Identify and evaluate important factors
4. Process of making and justifying a recommendation regarding client acceptance

Barnes and Fischer, LLP
-Midium-sized, national CPA firm
-Partnership formed in 1954
-Over 6,000 employees
-Mainly auditing and tax services, recently started information-systems-consulting for non-audit clients and non-public audit clients
-Never had client in the home appliance industry (current clients are in ...view middle of the document...

Zachery: principally in charge of the company’s procurement and manufacturing functions (meet weekly with Mr. Cole)
-Frank Stevens: VP Finance for 8 years (meet with Mr. Cole weekly)
-Ongoing difficulties with company’s new accounting system
-Early 2008: switched to new, integrated central accounting system (inventory, AR, AP, payroll, GL modules)
-Transition was mainly handled by former controller – not well managed
-Still modifying, retrain accounting staff, adapt company’s accounting controls to better complement the system
-Problem still exist in inventory tracking, cost accumulation, receivables billings and aging, payroll tax deductions, payables, and balance sheet account classifications.
-Parallel processing stopped in April 2008
-Several brief periods in 2008: conventional audit trails were not kept intact due to system failures and errors made by untrained personnel
-Internal management budget reports, inventory status reports, receivable billings are late and inaccurate/ several shipping deadlines are missed
-Sales/receivable system handles 2,900-3,400 transactions per month (1,200 active credit customers)
-6 largest customers = 15% of AR, remainder rengae from $1,500 to $32,000 (average $8,000)
-Finished goods are organized and well protected
-In-process inventories are less organized
-Complicated hybrid process-costing to accumulate inventory costs/account interdepartmental in-process inventory transfers for 4 major product lines
-Earnings have increased substantially in the past 3 years  increased acceptance in small appliance market
-3 years ago: qualified audit opinion – revenues and receivables
-Changed auditors 3 times over the past 12 years
Predecessor Auditor
-VPF (Frank) hesitant to discuss prior...

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