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This course prepares you for a peer review and what can be done on a daily basis to create a strong quality control environment for your firm. Learn the most common, significant deficiencies that peer reviews find time after time and what can be done to prevent them from occurring in your firm.
Objectives:Prerequisite: Experience in providing audit, compilation and review services.
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Chapter 1 - Introduction
Learning Objectives
What Is a Successful Peer Review?
This course is designed to provide you with the information necessary to achieve a successful peer review. What is a successful peer review? It depends on your point of view. The honest answer is that a successful peer review helps a firm improve its ability to perform engagements in conformity with professional standards. Therefore, this course assumes that participants are committed to establishing, maintaining, and improving the quality of their accounting and auditing practices. Often this attitude and commitment yields unmodified peer review reports.
Of course, no one can guarantee an unmodified peer review report or one with no letter of comments. However, if you properly implement the information in this course, you can certainly put the odds in your favor. A firm adds the most important ingredient of a successful peer review recipe well before the peer review starts. That ingredient is the environment within the firm that focuses on quality control. It starts with the proper tone at the top. Few firms can consistently achieve a successful peer review without it.
Course Perspective
This course presents quality control information from a firm's perspective. Since the objectives of firms and peer reviewers converge at the point of the peer review, information that is critical to one group is critical to the other. Consequently, much of the information in this course forms important components in the training of peer reviewers.
The standards applicable to a system of quality control apply to all firms, from the smallest practices to firms with SEC practices. However, firms with SEC practices are required to have additional quality control features in place. These firms are subject to inspection procedures by the Public Company Accounting Oversight Board (PCAOB) with respect to their SEC clients. While the concepts in this course apply to all firms, the additional PCAOB requirements are beyond the intent and scope of this course. As a result, PCAOB inspections and the engagements subject to them are not covered in the course. For informational purposes, a summary of the Center for Public Company Audit Firms Peer Review Program (CPCAF PRP) is provided in the following text.
Center for Public Company Audit Firms Peer Review Program (CPCAF PRP)
Background
Effective January 1, 2004, the AICPA SEC Practice Section (SECPS) was restructured into the Center for Public Company Audit Firms (CPCAF). Since the PCAOB is required to inspect and discipline auditors of SEC issuers, the restructuring removed those activities that are performed by the PCAOB which inspects, disciplines, and establishes auditing, quality control and independence standards for auditors of public companies. The PCAOB monitors member firms' SEC practices through programs like peer review and quality control inquiry and establishes practice requirements such as concurring review. CPCAF's mission and activities allow it to continue to serve and represent firms that practice or are interested in practicing before the SEC and PCAOB.
CPCAF Peer Review Program
CPCAF's framework includes the continuation of a peer review program (PRP) for a firm's accounting and auditing practice applicable to a firm's non-SEC issuers. Given the short time between the creation of the CPCAF PRP and the performance of the first reviews in 2004, CPCAF evaluated the SECPS peer review program to identify the revisions necessary to bridge the SECPS peer review program to the PCAOB's inspection process, thereby transitioning into the CPCAF PRP.
The result was a bridging document that identified the procedures to be performed and the documents to be used in performing a CPCAF peer review. The SECPS Reference and Peer Review Program Manuals remained the foundation of the peer reviews with the bridging document that must be used for guidance in identifying changes in procedures and reporting requirements.
How This Course Is Organized
The course content generally follows the sequence of events in a typical peer review cycle. Chapter 2 outlines the general timeline of significant peer review milestones. Understanding the flow of the cycle can help keep you on track between reviews. The timeline starts at the inception of a system of quality control and finishes with the completion of your peer review. It also includes elements for planning for your external peer review. Chapter 3 provides a summary of relevant quality control concepts, including the performance and reporting standards used by external reviewers. This knowledge provides the context in which you should evaluate your firm's system of quality control and the context in which your external peer reviewer will evaluate it. In Chapter 4, you will learn how to properly implement QC concepts into a workable system that fits the size, nature, and service mix of your firm. Topics include considerations for using external practice aids and sample quality control documents. Even if your firm already has a system in place, it is important to monitor that system. Chapter 5 covers the basics of monitoring and includes examples for four different types of monitoring reports. Monitoring includes both administrative reviews and inspection of engagements. Since it can help to know the types of engagement deficiencies that other firms have encountered, chapter 6 includes a summary a summary of common deficiencies as well as other information that can help you perform effective inspections of engagements. This chapter also provides guidance for addressing specific engagement deficiencies. Although identifying deficiencies is important, knowing how to effectively and efficiently prevent them from recurrence is even more important. Chapter 7 shows examples of ways that firms can strengthen the design of their quality control and individuals' compliance with it. Finally, Chapter 8 wraps up the process by highlighting important areas to consider when completing a peer review.
How This Course Will Help You Learn
Each chapter explains and refreshes the main concepts of quality control, monitoring, and peer review. Key areas are illustrated through presentation, examples, exercises, and group discussion. Please share your quality control experiences, ideas, and questions. It adds to the quality of information and can make the day more interesting. If there a particular QC process you want to streamline, ask about it. Someone in the class might have just the answer you are looking for.
Topics
Course topics focus on areas of Professional Standards and Standards for Performing and Reporting on Peer Reviews that relate directly to organizing and monitoring your firm's system of quality control and preparing for your external review. Group exercises are provided a starting point for practical group discussions. The following topics are included:
A Final Note
A good system of quality control is fluid enough to change with the demands of public accounting. Understand the profession. Understand your firm. Monitor your system within this context. Make changes in your system as needed. These basics form the foundation of any strong organization - whether a CPA firm or any other type of organization.
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