You have recently been hired as a junior accountant for a local PA firm. The firm’s main practice involves reviews, compilations, and tax return preparation for small to medium business clients. The firm’s policy for all review engagements is to always obtain a bank confirmation and re-perform the client’s year-end bank reconciliation. You have recently been studying about review engagement standards for one of your professional accounting exams, and point out to your senior that these procedures are not actually required by the standards. This means your firm could save some money by skipping them. The senior agrees because, in her view, “cash is a pretty low-risk account anyway. It’s either right or wrong.” But she notes that the firm’s five partners are the ones who set the policy. “Maybe you should pull together a report on the advantages and disadvantages of this policy and present it to the partners—you might be able to make a big impression on them right away!”

Required:
a. Prepare the report suggested by your senior, and include your conclusion on whether on not this policy is appropriate.
b. Why do you think the partners have this policy? How do you think they will respond to your report and your conclusion?