CAVE, Marjon Godfrey D.

BSBA - FMA 4th year

Accounting case 3: PARAPROFESSIONALS ON AUDIT ENGAGEMENT

The managers and partners [who] were interviewed listed reduced manpower costs as
the major advantage for utilizing paraprofessionals [in CPA firms]. It seems that these
savings were realized in a number of ways.

First, there were significant savings in the salaries of paraprofessionals when compared
with new staff professionals.Furthermore, since a large number of paraprofessionals were
employed for less than 40 hours,many firms were realizing a significant savings in fringe
benefit cost. As one manager indicated, ―When we want to review inventory, we always
try to get our paraprofessional because of his experience in the use of the audit guide,
insights on inventory procedures, and level of training. ‖ Partners and managers indicated
that the part-time nature of the employment agreement for most paraprofessionals offered
the firm greater flexibility in scheduling work around peak business periods and aided in
reducing hours that cannot be billed. Certainly, the savings discussed above can have a
significant impact on dwindling profit margins or can be passed on to the client in the form
of reduced fees. As indicated [in this article], the billing rate for accounting
paraprofessionals [was much lower for paraprofessionals for both large and small firms].

Quality of work, especially on job assignments that require a large amount of detailed and
repetitive tasks, was also cited on several occasions as a major consideration when
employing accounting paraprofessionals. The fact that paraprofessionals are able to spend
longer periods of time on jobs and their willingness to do repetitive tasks may explain the
improved quality of work of paraprofessionals.

As one manager stated, ―The quality of work of our paraprofessionals far exceeds that
of our new staff professionals. ‖ Some of the practitioners who were interviewed still
expressed concerns about utilizing paraprofessionals and the legal implications of using
―less than qualified‖ individuals on audits. When considering using paraprofessionals on
audit engagements an argument could be advanced that the use of ―less than competent
audit personnel‖ is a violation of auditing standards. Of course, the basic question is: Do
these individuals possess the technical attributes one would normally expect of individuals
working in that capacity?

(a) Discuss the use of part-timers and paraprofessionals from the perspective of
controlling costs.

By hiring paraprofessionals, the business essentially reduces the cost of fringe benefits and
makes greater savings than it would by hiring new professionals. Additionally, savings result
from the disparity in pay between paraprofessionals and professionals. Additionally, the
organization can simply alter workloads, especially during busy times of the year, which is quite
useful.

(b) How could the use of part-timers and paraprofessionals impair the quality of
work performed by public accounting firms?
CAVE, Marjon Godfrey D.
BSBA - FMA 4th year
Accounting case 3: PARAPROFESSIONALS ON AUDIT ENGAGEMENT

Even if hiring paraprofessionals has benefits, by a wide margin

competency can still be seen and anticipated. Given that it is their area of expertise and they
completed the necessary schooling to meet the standards, professionals are still more qualified
and licensed to perform a task. Furthermore, paraprofessionals may be asked about their
professional judgment regarding some processes where independence is necessary in public
accounting.

(c) Is it ethical for a CPA firm to bill the time of paraprofessionals at the same
rate as fully qualified professionals? Discuss.

It is unethical for a business to set a rate that is the same for both qualified professionals and
paraprofessionals. Both are capable of performing the same task, but a fully certified
professional should be paid in accordance with their credentials. Furthermore, it shows great
disregard for the difficulties that properly competent experts have had to face.

(d) How could the use of part-timers and paraprofessionals affect the
effectiveness and efficiency of work performed in public accounting firms?

Generally, we may state that individuals with full qualifications are more competent and
compared to part-timers and paraprofessionals, full-timers are thought to be more equipped with
skills and expertise; however, this concept is not always true, which is why businesses
frequently employ these sorts of workers. There is no guarantee that using paraprofessionals
and part-timers will be less effective or efficient; in fact, their work is of higher quality than that of
fully qualified professionals. Additionally, hiring them is a great move for businesses and
enterprises. given that there are fewer and fewer professionals with comprehensive
qualifications.