Winston Gould is the controlling shareholder of Gould, Inc., a closely held corporation. He has expressed dissatisfaction with his present auditors and informs Henry Cramer, a CPA and member of the AICPA, that he will be appointed auditor if he agrees to the following proposals:

1. Because Gould's present dissatisfaction is related primarily to fees, which he feels are too high in relation to the time the job should take and the services rendered, Cramer is to quote a fee in advance and detail the services he would provide. This quotation must, of course, be lower than the fee presently being paid by Gould, Inc. 

2. Because Gould feels quite strongly that the company's auditor should take an active part in the operation of the business, Cramer is to serve as a director of Gould, Inc. While Gould appreciates that Cramer must maintain a position of financial independence, he points out that the acquisition of one qualifying common share would not interfere with his independence. 

3. Because Gould, Inc., has experienced financial difficulty during the past several years, Cramer is to accept redeemable preferred shares in lieu of fees for the first year of the engagement. As these shares have no voting rights Gould feels that Cramer's independence will not be affected. Moreover, if conditions improve significantly, the shares will be redeemed. 

4. Because Gould has certain personal income tax problems, Cramer is to review his affairs. As the possibility of refund is uncertain, Cramer's fee is to be 40 percent of all recoveries. 

5. Because Gould is very impressed with a particular auditor who has been employed on the audit for two years by the present auditors, Cramer is to hire the auditor and retain him on the audit. Gould knows that the auditor would be amenable to such a suggestion. With respect to each of the above proposals, what answers should Cramer give to Gould? Give reasons to support these answers.