Engagement Letters and Billing Situation Your firm is struggling financially It wishes to revisit its engagement letters and its billing practices in an attempt to maximize revenues Required Evaluate the following situations Answer the questions selecting yes or no as appropriate 1 The firm wishes to audit ABC Co , a private company, on a contingent fee basis Is this permitted Yes No 2 The firm wishes to do ABC Company's original tax return on a contingent fee basis ABC is an audit client Is this permitted Yes No 3 The firm wishes to do XYZ Company's original tax return on a contingent fee basis XYZ is not an audit client Is this permitted Yes No 4 The firm has been approached by LMN Co to represent LMN before a revenue agent examining LMN's income tax return LMN is not a client of the firm for any other purpose Can the firm perform this service on a contingent fee basis Yes No 5 The firm is preparing the tax return for DEF Corporation when it realizes that DEF's records are a mess, which makes it much more expensive for the firm to prepare the taxes DEF could save some money if it had a better record keeping software package The firm has such a package (produced by Winstorm Co ) which it often sells to its tax clients The firm wants to sell this package to DEF at a 20 profit without disclosing the markup Is this permitted Yes No

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Posted on Jun 22, 2024

Engagement Letters and Billing Situation: Your firm is struggling financially. It wishes to revisit its engagement letters and its billing practices in an attempt to

Engagement Letters and Billing

Situation:

Your firm is struggling financially. It wishes to revisit its engagement letters and its billing practices in an attempt to maximize revenues.

Required:

Evaluate the following situations. Answer the questions selecting "yes" or "no" as appropriate.

1. The firm wishes to audit ABC Co., a private company, on a contingent fee basis. Is this permitted?

Yes

2. The firm wishes to do ABC Company's original tax return on a contingent fee basis. ABC is an audit client. Is this permitted?

Yes

3. The firm wishes to do XYZ Company's original tax return on a contingent fee basis. XYZ is not an audit client. Is this permitted?

Yes

4. The firm has been approached by LMN Co. to represent LMN before a revenue agent examining LMN's income tax return. LMN is not a client of the firm for any other purpose. Can the firm perform this service on a contingent fee basis?

Yes

5. The firm is preparing the tax return for DEF Corporation when it realizes that DEF's records are a mess, which makes it much more expensive for the firm to prepare the taxes. DEF could save some money if it had a better record keeping software package. The firm has such a package (produced by Winstorm Co.) which it often sells to its tax clients. The firm wants to sell this package to DEF at a 20% profit without disclosing the markup. Is this permitted?

Yes