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Leppla Technologies, Inc. (LTI) is an audit client of Smith & Young, LLP. LTI has experienced increased competition in its industry that has caused profits

Leppla Technologies, Inc. (LTI) is an audit client of Smith & Young, LLP. LTI has experienced increased competition in its industry that has caused profits to decline over the last three years. To put the company on a better trajectory, LTI is considering employee layoffs to reduce expenses. LTI is planning significant layoffs in the accounting and finance department and within the internal audit function. Senior management of LTI believes that internal controls are adequate and that fewer employees are needed to monitor the internal control system. Management maintains that fewer employees are needed oversee the company’s accounting data since the accounting function is heavily dependent on IT.

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What issues should Smith & Young, LLP, consider when evaluating whether to continue the existing client relationship with Leppla Technologies?

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