Read the case:

For this discussion you are a member of the internal audit team at Ocean Manufacturing. Your assignment is to assist a member of Ocean Mfg. management on the client acceptance process. Your company, Ocean Manufacturing, is a medium-sized manufacturer of small home appliances. The management team hopes to make an initial public offering (IPO) of its common stock within the next few years and feels Ocean Manufacturing needs to build a relationship with a more nationally established CPA firm. In light of the circumstances in this case, why is client acceptance of Ocean Manufacturing such a big issue?

As a member of the internal audit team, you have been asked to prepare an internal memo for management giving your thoughts as to whether Barnes and Fischer will or will not accept Ocean Manufacturing, Inc. as an audit client. Carefully justify your position in light of the information in the case. Include consideration of reasons both for and against acceptance and be sure to address both financial and nonfinancial issues to justify your position so as to minimize risk for Ocean Manufacturing, Inc. As indicated in the case, one of the partners in another office of Barnes and Fischer has invested in a venture capital fund that owns shares of Ocean common stock. 

Would this situation constitute a violation of independence according to the AICPA Code of Professional Conduct? Why or why not?

Answer rating: 100% (QA)

The Client acceptance of ocean manufacturing ... View the full answer