Manny Machado, CPA, signed on to perform an inventory control study for a new client, ABC Company. Once the study is complete, he recommends a new inventory control system. Currently, ABC engages another audit firm to audit its financial statements. The financial arrangement is that ABC will implement the new systems and over the next 5 years, the will pay Machado 50% of the savings in inventory costs.

1. Indicate which principle or rule would be violated, or if none would be violated.
2. State why the rule would be violated.
3. Explain if there is a way to avoid breaking the rule by doing something different in these examples.