Question

Michael Fox is a promising senior manager beginning his tenth year at his audit firm. Michael has been a steady performer during his career and is known for his technical and personal skills. However, not all of the firm's partners are enthusiastic about Michael. His track record for bringing in new clients has been marginal. This weakness has not stopped Michael from moving up the ladder, but slow expansion in the client base has meant that the firm has not made a new partner for three years. Michael is well aware that his ability to bring in new clients is critical to his aspirations to become a partner. PQR Manufacturing Ltd (PQR), a large stationery manufacturer, has decided to put its audit and related accounting services out for tender. PQR's current auditor performs significant non-audit services. In fact, fees for non-audit services are well in excess of the audit fee. Michael has been given primary responsibility for developing and presenting the tender to PQR's board of directors. He has nearly completed preparations for the presentation and has discussed all the specifics with two partners who will have a significant involvement in servicing the audit and related service needs of PQR, should the firm be successful in its tender. As required by the board of PQR, a detailed outline of the proposal presentation and itemised preliminary budget were submitted four weeks in advance of the presentation. On the Thursday evening before the presentation, Michael's wife receives a call from her sister, Sandra. Sandra's flat mate, Suzanne, is the secretary of PQR's managing director. Suzanne had noticed that one of the proposal presentations was going to be done by someone named Michael Fox and asked Sandra whether it was the same Michael Fox who was married to Sandra's sister. Sandra had said that it was, and Suzanne had begun to tell her about some of the proposals. Suzanne had said that she had noticed several things about the managing director's evaluation of the proposal submitted by Michael's firm. Firstly, the bid was significantly higher than one of the other bids. Secondly, the managing director had mentioned two items of major importance that had been left out of the proposal. Suzanne could not remember what these two items were off the top of her head, but she told Sandra that she would be willing to run off a copy of the memo if Sandra wanted her to. Michael's wife tells him about the call from Sandra at dinner that evening.

1. Can you please help me to specify the alternative.

2.Also compare values and alternative.

Answer 1

Ans-1

For any proposal there are two aspects - Scope and the Pricing.Both are related as it is the scope that drives the efforts and hence the pricing.In the current scenario the bid was submitted almost a month in advance.Before final submission a clarity on the scope clarity should have been taken by Michael from PQR , this is standard practice or else in all likelihood the commercial bid is bound to go wrong.This was missing clearly in the current case and hence the issue.

Since it is the eve before presentation there is hardly anything that can be done but still the client can be approached for a confirmation on scope as appearing in the submitted document and can be asked to provide a few days to submit the revised bid in case there are gaps.This the best thing that can be done though should have been done long back as a first step even before submitting the commercial bid.

Ans-2

Accepting the memo although temting but will not be ethical.Suzanne by passing out a copy of memo will be commiting a violation of trust of position and confidentiality.Accepting the memo will tantamount to wrongful means of getting the insider information on part of Michael.Hence this cannot be the route anywhich way.

Better than violating the ethics it is suggested that Michael present the client his presentation with a special slide at the begining on his understanding of the scope of the assignment and with a rider that if there is any activity missing or gap in scope he would need a couple of days to fix and resubmit the bid and presentation.This is the best way to handle the situation.