Should Ocean Manufacturing Be Accepted As A New Audit?
I have been asked to recommend as to whether Ocean Manufacturing, Inc. should be accepted as a new audit client. I have used both financial and non-financial information in this memorandum to justify my recommendations. Ocean Manufacturing, Inc. is a medium sized manufacturer in the home appliance industry. Home appliance industry has showed tremendous growth potential over the past couple of years. Accepting Ocean Manufacturing, Inc. as an audit client would help Barnes and Fisher, LLP to expand in the home appliance industry by providing audit and consulting services. Ocean Manufacturing, Inc. intends to go public in the next couple of years which could result in the company being an even bigger and more profitable client. Once the company goes public, it will also increase Barnes and Fisher, LLP’s risk because third parties will rely on audited financial statements. …show more content…
is having trouble implementing a new IT system. Barnes and Fisher, LLP will be in a great position to provide consulting services by helping in the implementation and detection of control weaknesses in the new IT system. This service is in addition to audit service and will lead to an additional source of revenue for Barnes and Fisher, LLP. Sarbanes Oxley Act does not permit auditors to provide certain consulting services to public companies that they audit. It will be a couple of years before Ocean Manufacturing, Inc. goes public. Barnes and Fisher, LLP may provide consulting service until Ocean Manufacturing, Inc. goes public. Some may argue that providing consulting and audit services to the same client may impair Barnes and Fisher, LLP's independence. This can be dealt with by assigning different teams for audit and consulting services. The pros of providing both services far outweigh the
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