Determining the public accounting firm

Reference no: EM131025597

Madison 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.

Required:

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.

Reference no: EM131025597

Questions Cloud

How long will they be 216 miles apart : Two cars leave a restaurant at the same time and travel in opposite directions. One averages 50 miles per hour and the other averages 40 miles per hour. After how long will they be 216 miles apart?

Find the mean and variance of these incomes : Annual incomes for heads of household in a section of a city have approximately a gamma distribution with α = 20 and β = 1000. Find the mean and variance of these incomes.

Total effective tax rate on the corporation earnings : Consider a C corporation. The corporation earns $3.5 per share before taxes. After the corporation has paid its corresponding taxes, it will distribute 100% of its earnings to its shareholders as a dividend. What are the shareholder's earnings from t..

What is the change in gdp if investment is increased : Find GDP when a=10, I=100, G=60 and NX=50. What is the change in GDP if investment is increased by 20, holding everything else constant? What is the change in GDP if government expenditure is increased by 20%, holding everything else constant

Determining the public accounting firm : Madison 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,

After underwriting and flotation expenses : Derek Incorporated recently developed an electric car which contains robot technology for self-driving. The owner was original employed by Tesla and was previously sued for violating confidentiality clauses specific to development of Tesla; however, ..

Write probability density function for the response times : The response times on an online computer terminal have approximately a gamma distribution with mean four seconds and variance eight seconds2. Write the probability density function for the response times.

Expected to increase at a constant growth rate : Jane’s sister-in-law, a stockbroker at Invest, Inc., is trying to get Jane to buy the stock of HealthWest, a regional HMO. The stock has a current market price of $25, its last dividend (D0) was $2.00, and the company’s earnings and dividends are exp..

Find the probability that an earthquake striking : The magnitude of earthquakes recorded in a region of North America can be modeled as having an exponential distribution with mean 2.4, as measured on the Richter scale. Find the probability that an earthquake striking this region will exceed 3.0 o..

User Account

All Pages