“Look, Tim, I’ve been told that the competition for the audit of Diamond Health Services is really competitive, and you know what it would mean to the both of us to bring this one in. You would be a sure bet for the Executive Committee, and I would take over some new audit responsibility as your backup partner. Let’s quote the job really competitively and get it.”
“I’m not sure, Anne. After all, we have to make a reasonable profit or we’re not pulling our weight. Anyway, you don’t know what problems we may meet, so you should build in a cushion on the front end of the job.”
“But, Tim, if we quote this job the usual way—on an hourly rate and estimated total time basis—we are going to miss it! The CFO as much as told me we would have to be lower than the current auditor, and we would have to guaranty the fee for two years. Now, are we in or not? I plan to put our best staff on the job. Don’t worry; they won’t blow it. What’s the matter? Don’t you think I can get the job done?”
“Well, Anne, I suppose there would be some overall saving to our firm because this audit is the only one of six companies in the Diamond Group that we don’t audit. We certainly don’t want any other auditors getting a foothold in the Diamond Group, do we? What are you proposing, anyway: a fee that’s at a lower margin than normal or one that’s below the projected cost for this job? Either way, it’s unethical, isn’t it?”
Question
- Answer the question posed to Tim.
- What would you do if you were Tim?
Prepare a report with a minimum of 1,500 words for the following case study.