Hi, I am doing Case Stuy for accouting class. The Case is as follows:

Caroline, CPA is a sole proactioner, with two professional empolyees(a CPA with three years of experinece and a new college graduate with an accounting degree). Caroline is bidding on the audit of a local city. Caroline is trying to break into the market for government audits. Last year the city paid$25,000 its audit. Caroline is considering bidding only $10,000 to perform the audit.

Question1: What ethical threats exist for Caroline and her firm? I am not sure about this question. Is this mean Caroline is trying to give a serice for $10,000 and getting the rest of the money for herself or her firm? Question2: What safeguards can Caroline put in place so that firm does not have any ethical violations? I don't understand the meaning of this quesion.

Please help me. Thank you so much.