As an audit manager. One of your responsibilities is to generate new business.
You have been approached by a potential client that appears to be an wonderful fit for your organization. But, the client insists on an very aggressive time allotment for the audit. The client explains that they definitly need to get the audit done for a pending public offering.
To entice you to accept the audit, the client insists that a contingency should be put in place in the payment structure. If the audit is done early or on time, your firm will receive a bonus. If the audit takes longer than the agreed time frame your firm will be penalized.
You also know that the firm has just lost a major client and that if you do not accept the engagement, several of your auditors will have to be terminated.Outline the guidance required by auditors on contingencies.Explain what you would do and why. Are there any alternative strategies?