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March 1, 2023March 1, 2023 Discipline: Business Finance - Management

 

Tana Thorne works in a public accounting firm and hopes to eventually be a partner. The management of Allnet Company invites Thorne to prepare a bid to audit Allnet’s financial statements. In discussing the audit fee, Allnet’s management suggests a 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.

  • Who are the parties potentially affected by this audit and the fee plan proposed?
  • What are the ethical factors in this situation? Explain.
  • Would you recommend that Thorne accept this audit fee arrangement? Why or why not?
  • What are some ethical considerations guiding your recommendation?

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