BTN 1,3 Craig Thorne works in a public accounting firm and hopes to eventually b

Question

BTN 1,3 Craig Thorne works in a public accounting firm and hopes to eventually be a partner. The man- agement of Allnet Company invites Thorne to prepare a bid to audit Allnet's financial statements. In dis- cussing 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 ETHICS CHALLENGE 1. Identify the parties potentially affected by this audit and the fee plan proposed 2. What are the ethical factors in this sithation? Explain. 3. Would you recommend that Thorne ascept fhis audit fee arrangement? Why or why not? 4. Describe some ethical considerations guiding your recommendation.

Explanation / Answer

1) The parties which are going to be affected by this audits are -Public accounting firm (along with Thorne), Government and Allnet Company, stakeholders of Allnet Company.

2) Ethical factors for Throne in the situation are below-

3) I will not recommend Throne to accept the audit fee arrangement because it is not being fair to the stakeholders of the company and breaking the professional ethics for his own short term gain. Also, it might also not be legally advantageous to accept the fee plan because it is dubious.

4) There are various ethical considerations which will guide my decision-

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