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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 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:
Problem 1: Would you recommend that Thorne accept this audit fee arrangement? Why or why not?
Financial Statement Analysis and Preparation
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