Your audit client, Science Tech Incorporated, installed a cost accounting system devised by the consulting services department of your firm. The system failed to account properly for certain product costs $($according to management$),$ and the system had to be discontinued. Science Tech management was very dissatisfied and filed a lawsuit demanding return of the $$10,000$ consulting fee. The audit fee is normally about $$50,000,$ and $$10,000$ is not an especially large amount for your firm.

However, you believe that Science Tech management operated the system improperly. You are willing to do further consulting work at a reduced rate to make the system operate, but you are unwilling to return the entire $$10,000$ fee.