Arens - suggested approach to Problems and case - chapter 2

Arens - suggested approach to Problems and case - chapter 2...

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Unformatted text preview: 2-16a. Engagement performanceb.General human resource policies and Engagement performancec.Engagement performanced.Engagement performancee.General ethical requirements and Independencef.Engagement quality control reviewg.Client acceptance or continuance h.General human resource policies i.General human resource policies2-18Note the following supplemental information: The comments in the problem do summarize the beliefs of some practitioners about quality control and practice inspection. The arguments against quality control and practice inspection are stated in the comments and can be summarized as five basic arguments.(1)Relative cost for smaller firms is excessively high.(2)Smaller firms have less need for quality control because of greater partner involvement.(3)It eliminates the major competitive advantage of smaller firms which is a simple and efficient organizational structure.(4)Quality control standards are not needed because they have already been implemented by quality firms.(5)Three other things already provide assurance of adequate quality: auditing standards, legal liability, and a competitive economic environment.To support these comments it can be argued that the profession has functioned well with relatively little controversy and criticism. A major reason many practitioners choose the profession is the relative freedom to operate their professional practice as they see fit.Solution to text problema.The arguments against these comments are primarily as follows:It will not be costly for most smaller firms to implement quality control requirements because the quality control standards required are not onerous unless the firm chooses to register with the CPAB and conduct public company auditsThere is no need to eliminate the simple organizational structure now enjoyed by many smaller public accounting firms.Certain critics of the public accounting profession have argued strongly against self-regulation of the profession. Many public accountants believe that only through self-regulation will it be possible to minimize government interference. Even if the elements of quality control enunciated possible to minimize government interference....
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This note was uploaded on 02/19/2012 for the course ACCT Audit taught by Professor Niki during the Spring '12 term at Saint Mary's University Texas.

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Arens - suggested approach to Problems and case - chapter 2...

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