Barns And Fischer

The accounting firm of Barnes and Fischer, LLP, is a medium-sized, national US-based CPA firm. The partnership, formed in 1954, now has more than 6,000 professionals on the payroll. The firm mainly provides auditing and tax services, but it has recently had success in buildÐ'¬ing the information-systems-consulting side of the business.

It is mid-January 2005, and you are a newly promoted audit manager in an office of Barnes and Fischer, located in the Pacific Northwest. You have been a senior auditor for the past three years of your five years with Barnes and Fischer. Your first assignment as audit manager is to assist an audit partner on a client acceptance decision. The partÐ'¬ner explains to you that the prospective client, Ocean Manufacturing, Inc. is a medium-sized manufacturer of small home appliances. The partner recently met the company's president at a local chamber of commerce meeting. He indicated that, after some diffiÐ'¬cult negotiations, the company has decided to terminate its relationship with its current auditor. The president explained that the main reason for the switch is to establish a relationship with a more nationally known CPA firm because the company plans to make an initial public offering (IPO) of its common stock within the next few years. Ocean's annual financial statements have been audited each of the past 12 years in order to comply with debt covenants and to receive favorable interest rates on the comÐ'¬pany's existing line of credit. Because the company's December 31 fiscal year-end has already passed, time is of the essence for the company to contract with a new auditor to get the audit under way.

The partner is intrigued with the idea of having a client in the home appliance industry, especially one with the favorable market position and growth potential of Ocean Manufacturing. Although there are several small home appliance manufacturers in the area, your office