The 12 partners of a regional PA firm met in special session to discuss audit engagement efficiency. Jones spoke up, saying:
“We all certainly appreciate the firm-wide policies set up by Martin and Smith, especially in connection with the audits of the large companies that have come our way recently. Their experience with a large national firm has helped build up our practice. But I think the standard policy of conducting reviews and tests of internal control on all audits is raising our costs too much. We can’t charge our smaller clients fees for all the time the staff spends on this work. I would like to propose that we give engagement partners discretion to decide whether to do a lot of work on assessing control risk. I may be an old mossback, but I think I can finish a competent audit without it.”
Discussion on the subject continued but ended when Martin said, with some emotion: “But we can’t disregard generally accepted auditing standards like Jones proposes!”
What do you think of Jones’s proposal and Martin’s view of the issue? Discuss.