Statements of Position

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The Auditing Standards Board (ASB) is considering the issuance of two Statements on Quality Control Standards (SQCSs) to provide a CPA firm with improved guidance for establishing and maintaining a quality control system for its accounting and auditing practice. Proposed Statement of Quality Control Standard, System of Quality Control for a CPA Firm's Accounting and Auditing Practice (A Revision of SQCS No. 2) In recent years, the Securities and Exchange Commission (SEC) has successfully brought enforcement actions against individuals who, in the SEC's opinion, did not apply professional standards in his or her role as the concurring partner reviewer on SEC engagements. A task force established by the SEC Practice Section observed that professional standards do not discuss the role of the concurring partner reviewer and recommends that a revision be made to the quality control standards to require a firm to address in its quality control policies and procedures, if applicable, the SEC Practice Section membership requirement for concurring partner reviews on SEC engagements. To assist individuals who wish to comment on the proposed Statement the SEC Practice Section has provided, on its webpage, the concurring partner review membership requirement and related appendix. The Website address of the SEC Practice Section is http://www.aicpa.org/members/div/secps/index.htm. Proposed Statement on Quality Control Standard, the Personnel Management Element of a Firm's System of Quality Control—Competencies Required by a Practitioner-in-Charge of an Attest Engagement The Uniform Accountancy Act (UAA), a model legislative statute and related administrated rules issued by a joint task force of the AICPA and the National Association of State Boards of Accountancy (NASBA), provides certain requirements concerning licensees in public practice that supervise attest services or signs or authorizes someone to sign the accountant's report on the financial statements on behalf of the firm to meet certain experience requirements as required by professional standards. Thus, the issuance of the UAA resulted in consideration of the best method to address this particular requirement of the UAA in professional standards. This in turn resulted in a reconsideration of the Personnel Management element of quality control. A firm would be required to adopt quality control policies and procedures to provide the firm with reasonable assurance that individuals who are responsible for supervising accounting, auditing, and attest engagements and signing or authorizing an individual to sign the accountants report on such engagements meet certain minimum competencies. The Joint Task Force on Quality Control Standards has recommended revisions to the Guide, Quality Control Policies and Procedures for CPA Firms: Establishing Quality Control Policies and Procedures, to provide guidance to firms on implementing and monitoring the requirements outlined in the proposed Statement. The ASB anticipates approving the revised Guide concurrently with the adoption of this proposed Statement and has provided excerpts of the Guide on its Web site to assist individuals who wish to comment on the proposed Statement. The Web site address of the ASB is http://www.aicpa.org/members/div/auditstd. The proposed standards have been developed based on the recommendations of the Joint Task Force on Quality Control Standards, which was formed to develop general guidance for a system of quality control. In addition to ASB representation, the task force is composed of representatives from the SEC Practice Section Peer Review Committee and the AICPA Peer Review Board. The task force wishes to acknowledge the contributions of its observers from NASBA and the Public Oversight Board. The SEC Practice Section Peer Review Committee and the AICPA Peer Review Board have reviewed the exposure drafts and have advised the ASB that, although modifications may need to be made to their peer review programs, these modifications are not expected to result in an expansion of peer review to services provided beyond a firm's accounting and auditing practice. Proposed Statement on Quality Control Standards, System of Quality Control for a CPA Firm's Accounting and Auditing Practice (a Revision of SQCS No. 2) This proposed Statement revises the Engagement Performance element of quality control and will require a firm to establish policies and procedures, cf7 if applicable, to address the SEC Practice Section's membership requirement for concurring partner review on SEC engagements. This revision will now provide a link to professional standards and the membership requirement of the SEC Practice Section. Proposed Statement on Quality Control Standards, the Personnel Management Element of a Firm's System of Quality Control—Competencies Required by a Practitioner-in-Charge of an Attest Engagement This proposed Statement establishes a requirement for a firm to adopt quality control policies and procedures to provide reasonable assurance that individuals responsible for signing attest reports meet certain competencies. The proposed standard focuses on competencies that an individual would be expected to possess for certain kinds of attest engagements. The concept of competency is consistent with the existing Personnel Management element of quality control, which among other matters, requires that "those hired possess the appropriate characteristics to enable them to perform competently" and "work is assigned to personnel having the degree of technical training and proficiency required in the circumstances." These proposed Statements would amend QC Section 20.18 of SQCS No. 2 and provide additional guidance to firms about adoption of policies and procedures relating to the personnel management element of quality control. Issuance of the proposed Statements would also require the adoption of amendments to the Guide Quality Control Policies and Procedures for CPA Firms: Establishing Quality Control Policies and Procedures (the Guide), to be updated. As a result of the issuance of these Statements and updating the Guide, firms with well-established quality control systems should not have to make significant modifications to their policies and procedures.

Publication Date

1999

Relational Format

Book

Keywords

Accounting -- Quality control; Auditing -- Quality control; Accounting firms -- United States -- Personnel management

Disciplines

Accounting | Taxation

Comments

Originally published by: American Institute of Certified Public Accountants; Copyright and permission to reprint held by: American Institute of Certified Public Accountants.

Proposed statements on quality control standards : system of quality control for a CPA firm's accounting and auditing practice : (a revision of Statement on quality control standards no. 2, System of quality control for a CPA firm's accounting and auditing practice : and the personnel management element of a firm's system of quality control-- competencies required by a practitioner-in-charge of an attest engagement;System of quality control for a CPA firm's accounting and auditing practice : (a revision of Statement on quality control standards no. 2, System of quality control for a CPA firm's accounting and auditing practice : and the personnel management element of a firm's system of quality control-- competencies required by a practitioner-in-charge of an attest engagement;Personnel management element of a firm's system of quality control-- competencies required by a practitioner-in-charge of an attest engagement; Exposure draft (American Institute of Certified Public Accountants), 1999, June 17

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