61. The cost of “people” constitutes 75 percent to 80 percent of the total costs of operating a public accounting firm. In periods of economic contractions (such as the late 1980s and early 1990s), accounting firms have to look to cut labor costs to keep costs in line with decreasing revenues. Many firms have resorted to the restricted use of part-time employees who can be laid off during the slack periods in the year. Part-timers include college interns, and parents with young children who only want to work during the busy season. Firms have also resorted to the use of paraprofessionals, individuals with two-year degrees in business.

SOURCE: Don Istvan, “Cost Cutting: A Survival Plan,” Accounting Today (November 11, 1991), p. 26. © 2000 Thomson Financial. Reprinted with permission.

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

b. How could the use of part-timers and paraprofessionals impair the quality of work performed by public accounting firms?

c. How could the use of part-timers and paraprofessionals affect the effectiveness and efficiency with which work is performed in public accounting firms?