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Tana Thorne works in a public accounting firm and hopes to eventually be a partner. The management of Allnet Company invites Thorne to make 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.
Question 1: Identify the parties potentially affected by this audit and the fee plan proposed.
Question 2: What are the ethical factors in this situation?
Question 3: Should Thorne accept this audit fee arrangement? Why or why not?
Question 4: Describe some ethical considerations guiding your recommendation.
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