Maple & Co is suffering from declining revenue, and as a result of this, another audit manager has been asked to consider how to improve the firm’s profitability. In a conversation with you this morning he mentioned the following:

‘We really need to make our audits more efficient. I think we should fix materiality at the planning stage at the maximum possible materiality level for all audits, as this would reduce the work we need to do.

I also think we can cut the firm’s overheads by reducing our spending on training. We spend a lot on expensive training courses for junior members of the audit team, and on Continuing Professional Development for our qualified members of staff.

We could also guarantee our clients that all audits will be completed quicker than last year. Reducing the time spent on each assignment will improve the firm’s efficiency and enable us to take on more audit clients.’

Required:

Comment on the practice management and quality control issues raised by the audit manager’s suggestions to improve the audit firm’s profitability. (6 marks)