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The suggested answer says :-
“Fees should be calculated based on the time that would need to be devoted to an assignment to ensure a quality service was provided.
Offering a fee 25% lower than the current auditor is effectively lowballing. Cutting fees by 25% could result in poor quality work being conducted.”Instead of writing the above mentioned answer, please let me know if I would score marks for writing this :-
Offering a fee 25% lower than the current auditor is effectively lowballing.
Lowballing / giving a % discount in promotional material is allowed if :-1) Description of services does not mislead the client about the “range of services” to be offered.
2) Fee quoted should be “Economically Viable” for the firm.
3) Appropriate standard of audit is maintained .i.e low quality audit is not performed.
I am sorry but I cannot respond to such “marking” requests for AA/AAA because it would open floodgates to similar – and I simply don’t have the time/resources for such an undertaking. There are, however, some excellent resources “sticky posted” (see the “starred” posts) at the top of this forum – to help students better understand what will earn marks in the exam. I recommend to you both the “Read the mind of an AAA marker – ESSENTIAL READING” post and the “This was the most productive 1 hour ….” post.
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