Discussion:CPA Firm System of Quality Control
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Discussion Forum Index --> Accounting Questions --> CPA Firm System of Quality Control
| 29 November 2006 | |
| Hi All:
Question regarding a CPA Firm System of Quality Control. My own firm is somewhat lacking in this category and I thought I'd get feedback as to what other firms are doing. I have always been under the assumption that, essentially, a sole proprietor does not need to have a separately stated System of Quality Control. Now that I am doing audits (yellow book), I was wondering what other firms are or are not doing. This question is not about CPE (I am all set with the 40 hour per year requirement).... I am wondering only what other sole proprietors, who do audits, have for a system of quality control that satisfies PEER REVIEW requirements....! Thx in advance!!!! | |
| November 29, 2006 | |
| When I went out on my own, I thought I'd have to have a Quality Control Document (QCD). Therefore, when I attended a seminar about auditing and internal controls, I asked the instructor if I could have a copy of his firm's QCD. He gave it to me. I also have a copy from a local peer reviewer. As it turns out, I don't need either copy. After I found out how much more my costs would be (higher peer review and liability insurance), I decided not to offer auditing services. You might want to check with a local CPA. If you don't know any, I highly recommend you start networking. I've found other CPAs to be wonderful resources. | |
| 29 November 2006 | |
| Thanks, Natalie.
I've been operating under the assumption that as a sole practitioner, you are not required to have a QCD. I've been operating under the assumption that ONLY if you are more than a solo then you must have a QCD...so all CPAs and CPA candidates in your firm are in compliance with the firm standards (QCD.) As of now, as a sole practitioner, I do not have one. I'm still not convinced that one is needed for a sole practitioner but I am working on trying to find the answer - I need to take care of that NOW. My overhead fees (peer review, ppc guides) as a percentage against the audit revenue makes the audit work worth the while..... Thanks again for your valued and trusted input ! | |
| November 29, 2006 | |
| Actually, I found out I was not required to have a formal document even if I had pursued auditing. My peer reviewer told me that if I didn't have a formal document, he would give me a list of questions to complete. That would serve as documentation to him what my policies were. I do not have any employees. I'm not sure if the requirements change if you have employees. | |
| 29 November 2006 | |
| Very good, Natalie....I think that if there are other CPAs and other employees then you are required to have a formal QCD....but if/WHEN I find out otherwise, I will post it here....ALL OF THE PPC CHECKLISTS ARE REFERRING TO A SYSTEM OF QUALITY CONTROL.... | |
| November 29, 2006 | |
| Since you're operating by yourself, your system is probably mostly in your head. For example, what are your policies about accepting clients and jobs? In some respects it's much easier when you operate on your own because you know what ALL of the procedures are, and you know whether or not you are following them. | |
| 8 February 2007 | |
| I, too am a sole practioner (SP), concerned with peer review. In Michigan the laws recently changed. In order to maintain licensure, all CPA firms who perform compilations, reviews, and audits must go through peer review. I would consider most write up work to fall in the compilation category (most of my clients, although they won't admit it, are sending year-end financials to the bank. So, I usually issue full disclosure f/s at 12/31). So, for me, if I have to go thru the PR, I might as well add audits to my services. I have read that a SP does not need a written QCD but does need to have one. Why not write one? It saves the peer reviewer time and you time when they come to ask questions. We want our attest clients to maintain written control procedures (I do, anyway). So, the extra time we spend on establishing a written QCD should be no problem. How are other SP out there documenting their monitoring? Does anyone use another SP CPA to do pre or post issuance? If so, are you being charged for this service or are you reciprocating? This is an arrangement that I would like to find. I am currently paying another CPA to do pre-issuance reviews of my audits. | |
| 8 February 2007 | |
| Hello. I am another sole practitioner who does audits (yellow book too!). I have been through peer review twice by two different firms (my first reviewer retired a year after my 1st peer review so I had to find someone else for the second). I don't know if I am required to have a written QCD, but I do have one. To me it was easier have one (got one from a friend who worked for a larger firm and modified it as needed to be applicable to my practice) so that I'd have something to refer to make sure I was always doing things right. When I have gone through peer review I have been asked questions about my system of quality control and whether I have one. I have never been asked to show my written policies to anyone (although I may have been asked if I have written policies - I can't remember). I am a small firm - only require off-site peer review - I dont know if that makes a difference. Also, I hire (and pay) another CPA to review my workpapers for my audit and attest engagements before issuance. Good luck! | |
| February 8, 2007 | |
| I just finished my first peer review in November. Clean opinion. I was not asked about anything regarding a quality control document or procedures. The only thing he wanted to know was did I follow a checklist when I compiled or reviewed the financial statements. If you perform audits, you need to full-on system review which includes questions about your quality control. If you have employees, it is generally recommended that you have a written QCD. (I'm still not sure if this is required.) A system review costs significantly more than an engagement review, which is required if you issue full-disclosure compilations.
I like the idea of providing reciprocal review services on pre-issued financial statements. In the past I worked with a firm that had an outside reviewer who was paid per engagement. I don't know what the fee was. | |
