With today's strain on revenue and cash flow, external auditors are getting squeezed to lower their fees. And they have to in order to keep business. With this, comes some tough decisions on staffing. How do you staff an engagement for which you have accepted lower fees? If you were wanting to reduce your risk of not finding a deficiency but wanted to minimize labor how would you go about doing this? You could put fewer staff level employees on the job. This would lower labor, but put a higher burden on the senior and manager working the job. You could put more staff and have fewer manager hours in on the job as well. This would put more burden on employees who are not as well trained or experienced, but you would get more labor hours in for the same price.
What do you think would be the optimal strategy?
The optimal strategy will depend on the situation. The first priority should be to deliver quality work for the client even though you have accepted a low fee. Thus, the staffing would ...
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