Alison Kotecha, CPA, is meeting with a potential new audit client, Klein Advertising. Alison advertised her firm, A Kotecha, CPA, in the local newspaper. However, she ended up paying Jon Smit, a former colleague, $1,000 for the referral. Although she hasnt performed any audit engagements for the last four years, she did recently take a GAAP course. During the meeting, she reads over the prior years financial statements and tells the client she will accept the engagement. After reading the financial statements, she is certain that the fee will be less than the fee charged by the previous auditor.

Which of the following are concerns with the above scenario? (several choices may apply.) Please give reasoning.

1-There is a violation of the code of professional conduct regarding fees and pricing.

2-There is an independence issue.

3-Due to the referral fee, Alison is not in accordance with the code of conduct.

4-Alison has not acted with due care as she has agreed to perform work she does not have the technical competence to perform, because she has not conducted audits for some time and may not be current with the standards.

5-Alison has performed adequate client acceptance procedures.

6-Alison failed to demonstrate due care when she accepted the client without performing any of the required client acceptance procedures.

7-There is a violation of the code of professional conduct regarding firm names.