Required:(a) Explain the ethical problem in this case. Why is it a problem?words)(b) What can be done about it? -- Liona is the managing partner of Ross and Associates, a small audit firm. Liona's role includesmanaging the business affairs of the firm, and she is very worried about the amount of feesoutstanding from audit clients. Broomers Pty Ltd, one of the client of Ross and Associates, hasnot paid its audit fees for two years despite numerous discussions between Liona, their auditpartner Ball, and the management of Broomers Pty Ltd. Broomers Pty Ltd's management haspromised the fees would have been paid before the audit report for this year has beenpublished, Liona rang Ball this morning to ensure that the audit report was not issued becauseBroomers Pty Ltd had paid only 10 per cent of the outstanding account. She discovers thatBall is about to sign the audit report.

In business dealings with clients, the companies/firms go through a lot of situations like this. In…

Answered: (a) Explain the ethical problem in this…

Business

Accounting

(a) Explain the ethical problem in this case. Why is it a problem? words) (b) What can be done about it?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Required:
(a) Explain the ethical problem in this case. Why is it a problem?
words)
(b) What can be done about it? --

Liona is the managing partner of Ross and Associates, a small audit firm. Liona's role includes
managing the business affairs of the firm, and she is very worried about the amount of fees
outstanding from audit clients. Broomers Pty Ltd, one of the client of Ross and Associates, has
not paid its audit fees for two years despite numerous discussions between Liona, their audit
partner Ball, and the management of Broomers Pty Ltd. Broomers Pty Ltd's management has
promised the fees would have been paid before the audit report for this year has been
published, Liona rang Ball this morning to ensure that the audit report was not issued because
Broomers Pty Ltd had paid only 10 per cent of the outstanding account. She discovers that
Ball is about to sign the audit report.

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