Interactive Learning Approach Essay

Complicated sore computer system. The complicated system poses a couple of problems for the auditors. First, the auditors may dumbfound difficulty getting the information they need from the system, and a question arises regarding auditability. Second, unsatisfactory controls over the new system may increase the amount of crucial testing required. Client hesitant to take on new auditor to deal with previous auditor. Anytime a client is hesitant or un resulting to allow new auditors to communicate with the previous auditor, a red flag should be raised in the mind of the successor auditor, and a careful mental test of the issue, including consideration of management fair play, should ensue. Illegal gambling incident. This is a matter of worry because it raises the management integrity issue.What the V.P. of finance did was definitely wrong, exactly the impact on the overall integrity of management is a matter of judgment. This issue rouse be debated among the students. Some w ill come down on sensation side saying that if a key member of management is shoddy in one thing, he is likely to be dishonest in others. Other students will argue that the incident has little to do with the telephone line and its management, especially since there are no other known incidents. At a minimum, this incident creates an fortune to raise and discuss the central region of management integrity in the client acceptance decision.Initial prevalent offering. sea has plans to go public and aggressively expand into the national market. If successful, these plans will make Ocean a more attractive client for Barnes and Fischer, nevertheless they also serve to increase the auditors business jeopardy (increased reliance on the statements, increased litigation risk, etc.) and should be considered. Managements aggressiveness. There are some indications in the theatrical role that management is spontaneous to manipulate the financial statements via yr-end accruals and revenu e recognition to achieve comparatively low interest rates from creditors. This raises a potential management integrity issue, and should be heavily weighted in view of the fact that the future IPO may give management even greater incentive to manipulate the financial statements.Relationship with predecessor auditor. This issue is left by design debatable in the case, but is certainly a concern that should be raised. Therelationship with the predecessor auditor has been negative, and this is cause for concern. On the other hand, the piteous relations may be present because the auditor did non hurt a sound understanding of Oceans business and was not competent in helping Ocean with its new IT system. Personality issues raise also play a role. Further, the apparent differences over the current years audit fee should be a concern to Barnes and Fischer from a business perspective. Students should also raise positive non-financial issues, such as the opportunity to expand into a n ew industry and the opportunity to provide momentous consulting services relating to Oceans new IT system as puff up as to Oceans internal controls. The company has a relatively long and stable history in the small appliances industry.Further, Ocean is wellhead positioned in the small appliances market. With its plans for going public and expanding nationally, the company may conk an even larger and more attractive client. Some students will sound off the case represents a clear non-acceptance situation due to the negative factors listed above. The teacher can provide some perspective by pointing out that no prospective client comes without some concerns and problems. Ocean certainly presents some issues and concerns, but would likely be accepted by almost auditing firms. (Two different partners from major(ip) firms commented in presenting this case to graduate auditing courses that the level of risk presented by Ocean Mfg. was fairly typical of many of the firms clients. In o ur experience, most students indicate that they would not accept Ocean Mfg. as a client. This case provides an opportunity for students to better understand the subjective issues and risks that auditors face in practice.).