Andy Anderson works in a public accounting firm. He was recently promoted to manager and hopes to move up the ladder to partner one day. Anderson was contacted by management at Positively Positive, Inc. 

The management of Positively Positive asked Anderson to prepare a bid to audit Positive's financial statements. In discussing the audit fee, Positive's management suggests a fee structure in which the fee depends on the reported profit of Positive. The higher the reported profit, the higher the audit fee to Anderson's firm.

Required:

1) Is there an ethical concern? If so, what is it?

2) What options are available? List at least three options and the potential consequences of each?

3) What should Andy Anderson do? Justify your response?

Answer rating: 100% (QA)

1 Yes there is an ethical concern with this proposed fee structure The fee structure creates a conflict of interest for the auditor as their financial ... View the full answer