John Drake, a partner at Drake and Buetz, is meeting with a potential new client. The client recently saw the firms TV advertisement claiming that the firm was the premier accounting firm in western Canada. The client requires a review engagement report with its financial statements to obtain a bank loan. John advises that his fee will be 10 percent of any bank loan granted. What principles and/or rules of professional conduct apply to this scenario?(Several choices may be correct.)

1) There is a violation with regards to advertising.

2) Professional competence is lacking because of the advertising of the firm as the premier accounting firm.

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

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

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

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