Liona is the managing partner of Ross and Associates, a small audit firm. Liona's role includes

managing the business affairs of the firm, and she is very worried about the amount of fees

outstanding from audit clients. Broomers Pty Ltd, one of the client of Ross and Associates, has

not paid its audit fees for two years despite numerous discussions between Liona, their audit

partner Ball, and the management of Broomers Pty Ltd. Broomers Pty Ltd's management has

promised the fees would have been paid before the audit report for this year has been

published, Liona rang Ball this morning to ensure that the audit report was not issued because

Broomers Pty Ltd had paid only 10 per cent of the outstanding account. She discovers that

Ball is about to sign the audit report.

Required: (a) Explain the ethical problem in this case. Why is it a problem? (4 marks). (150 - 200

words)

(b) What can be done about it? (3 marks)