ASB and SECPS make revisions.

The SEC wanted professional standards to specifically address concurring partner responsibilities. In response, the ASB prepared an exposure draft that amends Statement on Quality Control Standards (SQCS) no. 2, System of Quality Control for a CPA Firm's Accounting and Auditing Practice. The new language calls for firms to establish engagement performance policies and procedures--encompassing all phases of the design and execution of the engagement--that address concurring partner review requirements (applicable to SEC engagements) as set forth in the SECPS membership requirements. When issued as final, the standard will be effective as of January 1, 2000.

To further refine the audit review process, the SECPS revised Appendix E, "Concurring Partner Review Requirement," of its membership requirements, establishing minimum qualifications for concurring partners and addressing the nature, extent and timing of the review and the required documentation. Although a concurring partner's review responsibility is not equivalent to that of an audit engagement partner, the concurring partner is expected to

* Discuss significant accounting, auditing and financial reporting matters with the audit engagement partner.

* Discuss the audit engagement team's identification and audit of high-risk transaction and account balances.

* Review documentation of the resolution of significant accounting, auditing and financial reporting matters, including those pertaining to consultation with firm personnel or external resources.

* Review a summary of unadjusted audit differences.

* Read the financial statements and auditors' report.

* Confirm with the audit engagement partner that no unresolved matters are likely to have a material effect on the financial statements or auditors' report.

The revision includes a "cooling-off period" provision affecting partner rotation: an audit engagement partner may not serve as a concurring partner for at least two years after his or her last year as the lead engagement partner. This provision could have a negative impact on small firms, whose rotation capacity may be limited. However, firms that would experience undue hardship as a result may request a waiver from the SECPS peer review committee. The revised SECPS membership requirements will be effective as of October 1, 1999.

The ASB exposure draft and the SECPS concurring partner review membership requirements and related appendix are available on the AICPA Web site at www.aicpa.org.