Inspecting Changes to AICPA Peer Review Standards.The New Year Will Ring in Changes to Peer Reviews Jan. 1 always marks a new beginning. For some, Jan. 1, 2001 will signal the true start of the new millennium, while for others its significance will be more practical and serve as a reminder of the multitude of laws and regulations that become effective as we ring in the new year. Among the changes to take note of are the revised AICPA AICPA See American Institute of Certified Public Accountants (AICPA). Standards for Performing and Reporting on Peer Reviews. These revisions are effective for peer reviews commencing on or after Jan. 1, 2001, and early implementation in part or whole is not allowed. Following are highlights of the three types of peer reviews under the new standards: SYSTEM REVIEW A system review applies to firms that perform engagements under Statements on Auditing Standards Statements on Auditing Standards, commonly abbreviated as SAS, provide guidance to external auditors on generally accepted auditing standards (abbreviated as GAAS) in regards to auditing an entity and issuing a report. (SAS (1) (SAS Institute Inc., Cary, NC, www.sas.com) A software company that specializes in data warehousing and decision support software based on the SAS System. Founded in 1976, SAS is one of the world's largest privately held software companies. See SAS System. ) or examinations of prospective financial information under the Statements on Standards for Attestation The act of attending the execution of a document and bearing witness to its authenticity, by signing one's name to it to affirm that it is genuine. The certification by a custodian of records that a copy of an original document is a true copy that is demonstrated by his or her Engagements (SSAE SSAE Statement on Standards for Attestation Engagements (auditing) SSAE Stamped Self-Addressed Envelope SSAE Standard South African English SSAE Society Of Senior Aerospace Executives (Washington, DC) ). This is essentially the same as the old on-site peer review with only a name change. Interpretation No. 1 to the current standards states that an on-site peer review can be performed at another location for a sole practitioner with four or fewer staff. The revised standards also would allow the system review to be performed at another location when, irrespective of irrespective of prep. Without consideration of; regardless of. irrespective of preposition despite the firm's size, the firm does not perform engagements covered by the SASs, or examinations or prospective financial statements under the SSAEs. This change was made to allow a firm, that is required to have a report review, to elect a system or engagement review. If a firm is required to have an engagement review, the firm can elect to have a system review. ENGAGEMENT REVIEW An engagement review is for firms that are not required to have a system review, and are not eligible for a report review. It is similar to the old off-site peer review and includes a separate report, letter of comments and letter of response. However, an engagement review's objectives also include whether or not the reviewed firm's working paper documentation conforms with the requirements of Statement on Standards for Accounting and Review Services (SSARS SSARS Statements on Standards for Accounting and Review Services ) and the SSAEs applicable to those engagements in all material respects. For review engagements, working paper documentation will be the management representation letter, and documentation of the matters covered in the accountant's inquiry and analytical procedures Analytical Procedures is one of financial audit skill which help an auditor understand the client's business and changes in the business, to identify potential risk areas and to plan other audit procedures. . Currently, SSARS does not have any documentation requirements for compilations. The documentation required under SSAEs depends on the type of engagement. In an engagement review, there is no opinion on the reviewed firm's quality control system. Therefore the reviewer is not opining o·pine v. o·pined, o·pin·ing, o·pines v.tr. To state as an opinion. v.intr. To express an opinion: opined on the defendant's testimony. on the firm's compliance with its own quality control policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental or with quality control standards, just conformity with SSARS and the SSAEs. REPORT REVIEW Report reviews are for firms that only perform compilations that omit o·mit tr.v. o·mit·ted, o·mit·ting, o·mits 1. To fail to include or mention; leave out: omit a word. 2. a. To pass over; neglect. b. substantially all disclosures. However, if a firm performs any compilations without disclosures that have selected information notes, the firm must have an engagement review. The technical reviewer will have the authority to accept the report without it going to the Peer Review Committee if there are no significant issues or repeat findings from the prior peer review. This will expedite the entire process. A report review's objective is to enable the reviewed firm to improve the overall quality of its compilation engagements that omit substantially all disclosures. To accomplish this objective, the reviewer provides a report with a list of comments and recommendations based on whether or not the financial statements and related accountant's reports appear to conform with the requirements of professional standards in all material respects. The comments and recommendations should be reasonably detailed so that the reviewed firm can evaluate which appropriate actions should be taken. For a report review, there is not a separate letter of comments and response. Rather, the peer reviewer prepares a written report after discussing the comments and recommendations with the firm and submits it to the reviewed firm and administering entity. An authorized firm member is then required to sign the report, whether or not there are comments, acknowledging that there are no disagreements on significant matters and that the firm agrees to correct matters included as comments. The firm is then required to submit the signed copy to the administering entity. However, a firm would not be prohibited from attaching a "response" to the signed copy. Linda McCrone, CPA (Computer Press Association, Landing, NJ) An earlier membership organization founded in 1983 that promoted excellence in computer journalism. Its annual awards honored outstanding examples in print, broadcast and electronic media. The CPA disbanded in 2000. is CalCPA's direct or of technical services. |
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