Madison Thorne works in a public accounting firm and hopes to eventually be a partner. The management of Allnet Company invites Thorne to pepare a bid to audit Allnet's financial statements. In discussing the audit fee, allnet's management suggestsua fee range in which the amount depends on the reported profit of Allnet. The higher its profit, the higher will be the audit fee paid to Thorne's firm. 1. Identify the parties potentially affected by this audit and the fee plan proposed. 2. What are the ethical factors in this situation? Explain. 3. Would you recommend that thorne  accept this audit fee arrangement? Why or why not? 4. Describe some ethical considerations guiding your recommendation.

Question

Madison Thorne works in a public accounting firm and hopes to eventually be a partner. The management of Allnet Company invites Thorne to pepare a bid to audit Allnet's financial statements. In discussing the audit fee, allnet's management suggestsua fee range in which the amount depends on the reported profit of Allnet. The higher its profit, the higher will be the audit fee paid to Thorne's firm.

1. Identify the parties potentially affected by this audit and the fee plan proposed.

2. What are the ethical factors in this situation? Explain.

3. Would you recommend that thorne  accept this audit fee arrangement? Why or why not?

4. Describe some ethical considerations guiding your recommendation.

Expert Answer

Want to see the step-by-step answer?

See Answer

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

See Answer
*Response times vary by subject and question complexity. Median response time is 34 minutes and may be longer for new subjects.

Related Accounting Q&A

Find answers to questions asked by student like you
Show more Q&A

Q: The following information is taken from the current year financial statement of EC (dollar figures a...

A: Loss from continuing operations: It refers to the loss incurred from ongoing business, it can be cal...

Q: Valerie's & Christopher, a large marketing firm, adjust in accounts at the end of each months. T...

A: Click to see the answer

Q: Two accountants for the firm of Elwes and Wright are arguing about the merits of presenting an incom...

A: Multi-step income statement: The income statement represented in multi-steps with several sub-totals...

Q: What are some examples of such exclusions in gross income?

A: Gross Income: For individual: Gross income includes the income of an individual in the form of wages...

Q: WHAT IS THE EQUITY INVESTMENT?

A: Equity: Equity refers to that part of the company’s capital which is raised by issuing equity shares...

Q: Create a table to compare and contrast the three types of corporate mergers: horizontal, vertical, o...

A: Merger is a voluntary fusion, in which two or more companies combine to work as a new legal entity. ...

Q: What makes up the capital gains and losses on a 1040 tax file?

A:  Capital Gain/Loss is the difference between the cost and selling price of a capital asset. Cost inc...

Q: Calculate gross profit, cost of goods sold, and selling price MBI, Inc., had sales of $600 million f...

A: Gross profit: Gross profit is the major part of the firm’s net profit. Gross profit can be calculate...

Q: The auditors of Steffey Ltd., decided to study the cash receipts and disbursements for the month of ...

A: The balances as per bank statement and as per general ledger can be reconciled by adding and subtrac...