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Using VTPR for self-assessment.

Last year, the AICPA Tax Division published its Guidelines for Voluntary Tax Practice Review (VTPR). The document outlines the procedures to be followed in voluntarily analyzing the effectiveness of a firm's tax practice procedures--both administratively and technically.

While it is probable that the most useful reviews are those conducted by an outside (a firm, an association or a tax practitioner experienced in maintaining a quality tax practice), the guidelines have also been prepared to accommodate self-reviews. However, because of the voluntary nature of this program, the Tax Division has purpoosely avoided any requirement for reporting the results of these reviews (whether self-assessed or firm-on-firm) to a central body, not has it provided any means for compiling information on the quantity or quality of reviews performed pursuant to the guidelines. Therefore, the ratio of the use of self-assessed to outside reviews is unknown.

The self-assessment process lends itself more readily to an administrative review, although a technical review should not be ruled out. A local practitioner should be able to gain considerable insight into the strengths and weaknesses of how its tax practice is being administered by simply following the instructions set forth in the guidelines. Planning for such a review soon after the April 15 deadline could produce valuable information for next year's tax season (and probably for the remaining deadlines and extended due dates for the balance of the current year).

The first step in the self-assessment process is the completion of the guidelines' "Questionnaire on Tax Practice Control Policies and Procedures." The questionnaire covers the nine basic elements of tax practice quality control. Because of firms' sizes or the nature of their tax practices, some of the nine areas may not be applicable to all firms; thus, some may be able to readily skip such questions.

The heart of the self-assessed administrative review is contained in the guidelines' "Suggested Administrative Review Procedures." The questions and directions under this heading should give the assessor a strong indication of which areas of its tax practice quality control need improvement and in which areas it is on firm ground. The findings in each area may be made clearer by concurrently reading and comparing the equivalent section of one of the sample quality control documents included in the guidelines.

Once the administrative review is completed, a firm may decide to follow up with a technical review. In any event, if the firm believes its tax practice does not warrant the cost of a firm-on-firm review, now is a good time to plan to do a self-assessment using the VTPR loose-leaf pages sent to all Tax Division members (and which can be purchased by nonmembers).

The Tax Division's Tax Practice Management Committee would like to learn whether or not the self-assessment process proved valuable to practitioners. It is particularly interested in any suggestions for improving the VTPR guidelines. Opinions, comments and recommendations should be sent to the committee's chairman, Robert M. Pielech, CPA, Pielech & Pielech, 800 Purchase Street, Suite 450, New Bedford, Mass. 02740.
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Title Annotation:Voluntary Tax Practice Review
Author:Werner, Bernard
Publication:The Tax Adviser
Date:Mar 1, 1992
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