Linda Lindeman, manager and owner of an advertising company in Charlotte, North Carolina, hadarranged a meeting with Eric Weddle, the chief accountant of a large, local competitor. The twoare lifelong friends. They grew up together in a small town and attended the same university. Ericwas a competent, successful accountant but currently was experiencing some personal financialdifficulties. The problems were created by some investments that had turned sour, leaving himwith a $25,000 personal loan to pay off just at the time his oldest son was scheduled to entercollege.Linda, on the other hand was struggling to establish a successful advertising business. She hadrecently acquired the rights to open a branch of a large regional advertising firm headquartered inAtlanta, Georgia. During her first two years, she had managed to build a small, profitable practice;however, the chance to gain a significant foothold in the Charlotte advertising community hingedon the success of winning a bid to represent the state of North Carolina in a major campaign toattract new industry and tourism. The meeting she had scheduled with Eric concerned the bid sheplanned to submit.Linda: Eric, I'm at a critical point in my business venture. If I can win the bid for the statesadvertising dollars, I'll be set. Winning the bid will bring $750,000 to $1,000,000 of revenues intothe firm. On top of that, I estimate that the publicity will bring another $350,000 to $400,000 ofnew business.Eric: I understand. My boss is anxious to win that business as well. It would mean a hugeIncrease in profits for my firm. It's a competitive business, though. As new as you are, I doubt thatyou'll have much chance of winning."Linda: "You may be wrong. You're forgetting two very important considerations. First, I have thebacking of all the resources and talent of a regional firm. Second, I have some politicalconnections. Last year, I was hired to run the publicity side of the governor's campaign. He wasimpressed with my work and would like me to have this business. I am confident that the proposalsI submit will be very competitive. My only concern is to submit a bid that beats your firm. If Icome in with a lower bid and good proposals, the governor can see to it that I get the work."Eric: "Sounds promising. If you do win, however, there will be a lot of upset people. After all,they are going to claim that the business should have been given to local advertisers, not to someout-of-state firm. Given the size of your office, you'll have to get support from Atlanta. You couldtake a lot of heat."Linda; "True. But I am the owner of the branch office. That fact alone should blunt most of thecriticism. Who can argue that I'm not local? Listen, with your help, I think I can win this bid.Furthermore, if I do win it, you can reap some direct benefits. With that kind of business; I canafford to hire an accountant, and I'll make it worthwhile for you to transfer jobs. I can offer youan up-front bonus of $25,000. On top of that, I'll increase your annual salary by 20 percent. Thatshould solve most of your financial difficulties. After all, we have been friends since day one andwhat are friends for?"QUESTION-1 (CONTINUED)Eric: "Linda, my wife would be ecstatic if I were able to improve our financial position asQuickly as this opportunity affords. I certainly hope that you win the bid. What kind of help can Iprovide?"Linda: "Simple. To win, all I have to do is beat the bid of your firm. Before 1 submit my bid, Iwould like you to review it. With the financial skills you have, it should be easy for you to spotany excessive costs that I may have included. Or perhaps I included the wrong kind of costs. Bycutting excessive costs and eliminating costs that may not be directly related to the project, my bidshould be competitive enough to meet or beat your firm's bid."Required: (Please note this answer should not be more than 3 pages maximum)a) What would you do if you were Eric? Explain the reasons for your decision and apply the codeof ethics to the proposal given, to Eric assume that Eric is a member of a professional accountingbody. (10 marks)b) What is the risk to Eric personally if he reviews the bid? Should the degree of risk influence hisdecision? Explain your reasons. (9 marks)