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MNO Co. has been audited by RS & Co. for two years (2015-2017) under a senior auditor Alexa. After numerous discussions and reminders from Alexa, MNO controller promised that the audit fee would be paid before the audit report for 2017 was issued. Alexa called the partner at RS & Co., Dr. James, to ensure that the audit report was not issued because MNO had only paid 10% of the outstanding amount. She discovers that Dr. James is about to sign the audit report.   • Explain the ethical problem faced by Alexa (and/or her audit firm) with MNO. Why is it a problem? What can be done about it?

MNO Co. has been audited by RS & Co. for two years (2015-2017) under a senior auditor Alexa. After numerous discussions and reminders from Alexa, MNO controller promised that the audit fee would be paid before the audit report for 2017 was issued. Alexa called the partner at RS & Co., Dr. James, to ensure that the audit report was not issued because MNO had only paid 10% of the outstanding amount. She discovers that Dr. James is about to sign the audit report.   • Explain the ethical problem faced by Alexa (and/or her audit firm) with MNO. Why is it a problem? What can be done about it?

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter3: Cost Behavior
Section: Chapter Questions
Problem 22E: Ginnian and Fitch, a regional accounting firm, performs yearly audits on a number of different...
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MNO Co. has been audited by RS & Co. for two years (2015-2017) under a senior auditor Alexa. After numerous discussions and reminders from Alexa, MNO controller promised that the audit fee would be paid before the audit report for 2017 was issued. Alexa called the partner at RS & Co., Dr. James, to ensure that the audit report was not issued because MNO had only paid 10% of the outstanding amount. She discovers that Dr. James is about to sign the audit report.

 

• Explain the ethical problem faced by Alexa (and/or her audit firm) with MNO. Why is it a problem? What can be done about it?

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