Auditing and Assurance Services 1st Edition by Iris Stuart

Exercise 4

Lowballing audit fees. When you prepare a bid for a new client, you always lowball the bid to get the client. You know that the fee is almost always adjusted at the end of the audit due to nonperformance on the part of the client, so you are not concerned that you will be unable to make a profit on the initial bid.
a. Does this practice of bidding low on the engagement fees to get the client violate the professional code of conduct Explain your answer.
b. Why might an auditor determine an audit fee in this manner