Melania Tsiprasis a public accountant in a medium- sized public accounting firm who takes an active part in the conduct of every audit she supervises. She follows the practice of reviewing all working papers of subordinates as soon as it is convenient, rather than waiting until the end of the audit.
When the audit is nearly finished, Melania reviews the working papers again to make sure she has not missed anything significant. Since she makes most of the major decisions on the audit, there is rarely anything that requires further investigation. When she completes the review, she prepares draft financial statements, gets them approved by management, and has them assembled in her firm's office. No other public accountant reviews the working papers because Melania is responsible for signing the auditor's reports.
REQUIRED
a. What are the pros and cons of the practice of reviewing the working papers of subordinates on a continuing basis rather than when the audit is completed?
b. Is it acceptable for Melania to prepare the financial statements rather than have the client assume that responsibility?
c. Evaluate the practice of not having a review of the working papers by another public accountant in the firm.
d. Assume Melania is an engagement quality control reviewer and she follows the same practice of reviewing while the engagement is in process. What are the pros and cons of this approach in the context of the EQCR?