Independent firm to provide financial performance

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Reference no: EM13311154

One way to reduce the ethical conflict would be in Sunset’s best interest to take the Financial Statement preparation duties away from PMI. Using and independent firm to provide financial performance provides a control that prohibits PMI from using assumptions that maximize profits of PMI at the expense of Sunset. Additionally, since PMI’s billing and collection fee is based on monthly net receivables, there is an incentive for PMI to not collect. PMI’s billing and collection fee should be based on collections rather than receivables.

Reference no: EM13311154

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