PROMPT: Obtaining a “Sufficient” Understanding of Internal Control. The 12 partners of a regional public accounting firm met in special session to discuss audit engagement efficiency. Jones spoke up, saying, “We all certainly appreciate the firmwide policies set up by Martin and Smith, especially in connection with the audits of the large clients that have come our way recently. Their experience with a large public accounting firm has helped build 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 of 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 old-fashioned, 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!”
QUESTION: What do you think of Jones’s proposal and Martin’s view of the issue? Please Discuss.
REQUIREMENTS: You must cite your sources (references) in order to receive full credit even if your source is the textbook. There must be 2 sources (excluding textbook). You must use APA style format for sources.