Star Software is a client of Jones & Parker, LLP. Star has experienced increased competition in its industry that has resulted in decreased profits over the last three years. In an effort to stay financially sound, Star is considering employee layoffs to decrease expenses. Star is planning significant layoffs in the accounting and finance department and within the internal audit function. Star management feels that internal controls are well established and fewer employees are needed to monitor the internal control system. Also, since the accounting function is heavily dependent on IT, fewer employees are needed to keep track of the company’s accounting data.

Required

What issues should Jones & Parker consider when deciding whether to continue the client relationship with Star Software? If Star were your client, would you continue to be the auditor? Explain.