Making Decisions as an Owner: Deciding about a Proposed Audit
You are one of three partners who own and operate Mary’s Maid Service. The company has been operating for seven years. One of the other partners has always prepared the company’s annual financial statements. Recently you proposed that the statements be audited each year because it would benefit the partners and preclude possible disagreements about the division of profits. The partner who prepares the statements proposed that his Uncle Ray, who has a lot of financial experience, can do the job and at little cost. Your other partner remained silent.
Required:
1. What position would you take on the proposal? Justify your response.
2. What would you strongly recommend? Give the basis for your recommendation.