The Following Clause Was Included in the Engagement Letter Between

question 68

Essay

The following clause was included in the engagement letter between Limits and Lobits, CPAs (L&L) and Fair, Inc., an audit client of (L&L).
Fair, Inc. agrees to release, indemnify, and hold Limits & Lobits, CPAs (its partners, heirs, executors, personal representatives, successors, and assigns) harmless from any liability and costs resulting from fraud caused by or participated in by management of Fair, Inc.
Do you think such a clause is ethical? Use ethical reasoning to support your answer with reference to professional standards.

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Definitions:

Responsibility Department

A department within an organization that is held accountable for specific tasks or outcomes, with a focus on managing and reporting its own performance.

Hybrid Costing System

A costing method that combines elements of both job costing and process costing, used for products that have both individual and mass production aspects.

Customer Needs

The wants and requirements identified by customers, which businesses aim to satisfy through their products or services to ensure customer satisfaction and loyalty.

FIFO Method

"First-In, First-Out," an inventory valuation approach where the first items acquired are the first ones sold, affecting the cost of goods sold and inventory valuation.