Oceanview Assignment 1 - Discussion Questions Essay
Factors Favoring Acceptance
1. The location being in Ocean City will be favorable for all auditors conducting the audit. This will allow for ease of travel for all auditors involved. This will also lend to the knowledge the firm has of the business and all relevant operations pertaining to Oceanview Marine Company.
2. The financial statements are organized in an easy-to-read fashion. They support that Oceanview is a healthy company and has been for the past three years. The past three years have been audited annually in accordance with their bank and management decisions.
Concerns about Acceptance
1. The location of the firm and client could lend to more knowledge but the client preferring this …show more content…
- I see two possible reasons why the firm might have undermined the first year costs. The first reason, most obvious, takes from a standard marketing strategy. The firm might value Oceanview as a customer and would like to continue doing business with them so they will assess the audit at a lower cost for the first year. This will entice the client to want to work with our firm for years to come as this company conducts annual audits. The not so obvious reason, but more likely, is that this being the first audit with this client, the firm may not know how much the audit will cost in total. So they are budgeting are larger number but assuming all things run smoothly, the $29,000 initial estimated audit fee may be realistic. But the budgeted fee of $37,590 is probably more realistic as I am gathering that the firm is budgeting for possible road bumps that might boost the actual cost of the audit.
4a. Purpose of communication with predecessor auditor.
- The reason for the communication between the predecessor auditor and successor auditor is that the successor will need to have access to information from past audits and overall integrity of Oceanview. Audit procedures range based on firm so our firm will conduct an audit different from the predecessor. The difference in