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Question 4a ii

You are a manager in Neeson & Co, a firm of Chartered Certified Accountants, with three offices and 12 partners.

About one third of the firm’s clients are audit clients, the remainder are clients for whom Neeson & Co performs tax, accounting and business advisory services.

The firm is considering how to generate more revenue, and you have been asked to evaluate two suggestions made by the firm’s business development manager.

A new partner with experience in the banking sector has joined Neeson & Co. It has been suggested that the partner could specialise in offering a corporate finance service to clients.

In particular, the partner could advise clients on raising debt finance, and would negotiate with the client’s bank or other provider of finance on behalf of the client.

The fee charged for this service would be contingent on the client obtaining the finance with a borrowing cost below market rate. (5 marks)

Required:

Evaluate the suggestion made above, commenting on the ethical and professional issue raised.