ACCT-361 – In-Class Exercises Begin Other Processes Example 1: Audit Firm: Fixed Rate Fees Forest & Kappa, CPAs, bills clients based on a fixed rate engagement fee that is determined at the time the engagement is secured. The engagement fee is based on the estimated number of hours required to complete the engagement (e.g., an audit) and the billing rates of the personnel (auditors) expected to perform the work. Care is taken in planning the engagement so it can be completed at a minimum cost, while ensuring quality work. Therefore, staff level employees perform most of the detailed work and managers and partners perform reviews and handle client relations. This takes advantage of the experience of the managers and partners as well as the lower rates of the staff and senior level people. An audit plan, developed at the time the firm bids on the work, is used to estimate the number of hours required by each level of auditor involved with the engagement. Audit plans are subsequently used to assign people to audits and individual
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