John Drake, a partner at Drake and Buetz, is meeting with a potential new client. The client recently saw the firm's TV advertisement claiming that the firm was "the premier accounting firm in westernCanada." The client requires a review engagement report with its financial statements to obtaina bank loan. John advises that his fee will be 10 percent of any bank loan granted.

What principles and/or rules of professional conduct applies to this scenario?

There is a violation with regards toadvertising.

Professional competence is lacking because of the advertising of the firm as the "premier" accountants.

There is no violation of any ethical principles or rules of professional conduct.

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

A bank always requires an audit, a review engagement is not permitted.

Fees are to be based on an estimate of work performed, not on percentage of a bank loan.