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Quality review: from skeptic to convert.

In response to the 1988 American Institute of CPAs proposal for a practice monitoring system, I voted against a mandatory quality review program. I'm a fiercely independent local practitioner; I rejected the idea that our practice needed to be monitored by an outside agency. We did quality work, and we certainly did not need someone to verify that.

My position on quality review ultimately led to an involvement with the New Mexico State Society of CPAs quality review committee. I immediately jumped at the chance; this was my opportunity to defend the little guy and protect our interests at the same time.

I walked into my first meeting ready to attack these "big city" accountants. Imagine my dismay at finding only local practitioners, some of whom I knew and respected. The first seeds of doubt were planted in my mind. Obviously, these professionals felt this program was important enough to donate their time and services. Maybe it was time for me to learn more about quality review.

I read the quality review standards again. I purchased a quality control implementation manual and reviewed the various practice aids available on the market. Eventually, it came to me. All these documents addressed two themes: standardization and documentation. Was it a coincidence that these were also our firm's biggest problem areas? Could the implementation of a quality control system solve these problems? I decided to find out.

With the help of various practice aids, we developed a quality control document, audit manual and compilation and review manual, which difined the questionnaires, checklists and work programs required for each type of engagement and eliminated guessing. Within the span of two weeks, standardization and documentation problems were solved--but only on paper. Next we began implementation.

I was fortunate to have partners who saw the system's advantages immediately; however, we decided an outside opinion was vital in determining whether our system was adequate. With this as a priority, we arranged for a consulting review.

Due to time constraints, our consulting review began one month after the system's implementation. To obtain maximum benefit from the review, we selected several completed engagements and documented compliance with our new quality control system. We discovered during the consulting review that our previous lack of standardization and documentation had resulted in some errors that, to say the least, were embarrassing. For the firm that knew it did quality work and certainly did not need to verify that, this was certainly an eye-opener. The transformation process was complete. We now knew we needed quality review for our clients, not just to comply with an AICPA program.

As I reflect on the last two years, I realize I have come full circle. Where once I had viewed the quality review process as an unnecessary evil, I now know it to be a cornerstone of the profession's future. As a wise man once said, "You can't trust your first impression." The conversion of the skeptic is complete.

Mike Stone is a partner of Stone, McGee & Co., Silver City, New Mexico. Following is an adaptation of his article in the February 1991 issue of the Silver State CPA. He discusses his apprehension about--and subsequent enthusiasm for--a quality review program.
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Copyright 1991, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Author:Stone, Mike
Publication:Journal of Accountancy
Date:Nov 1, 1991
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