Prp 4400 Form PDF Details

Ensuring the highest standards of quality control within CPA firms, especially those with two or more personnel, is critical for maintaining trust, integrity, and compliance within the accounting profession. The PRP 4400 form serves as a comprehensive guide for these firms, outlining the necessary policies and procedures to establish a robust system of quality control as mandated by Statement on Quality Control Standards (SQCS) No. 8, effective from January 1, 2012. This statement superseded previous standards, focusing on enhancing quality across various engagements such as audits, reviews, compilations, and attestations. It outlines six essential elements of quality control, each requiring specific policies: Leadership Responsibilities ('Tone at the Top'), Ethical Requirements, Client Relationships and Engagements, Human Resources, Engagement Performance, and Monitoring. Furthermore, it emphasizes the need for firms to document their quality control practices, adapt them to their structure and size, and ensure they contribute to a culture prioritizing quality work. The form also includes provisions for independence confirmation, guidance on client acceptance, engagement supervision, and handling of disagreements within engagement teams. By completing the PRP 4400 questionnaire, firms not only document their compliance with SQCS No. 8 but also engage in self-assessment to identify areas for improvement, ensuring that their quality control systems are both effective and reflective of the firm's operational nature.

QuestionAnswer
Form NamePrp 4400 Form
Form Length45 pages
Fillable?No
Fillable fields0
Avg. time to fill out11 min 15 sec
Other namesaicpa prp section, PRP, ProceduresFirms, prp section

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00-11 MAY 2015

Quality Control Policies and Procedures—Firms With Two or More Personnel

4401

PRP Section 4400

Quality Control Policies and Procedures Documentation Questionnaire for Firms With Two or More Personnel1

.01 Statement on Quality Control Standards (SQCS) No. 8, A Firm's System of Quality Control (AICPA, Profes- sional Standards, QC sec. 10) (effective as of January 1, 2012), supersedes all existing SQCSs, establishes standards, and provides guidance for a CPA firm’s responsibilities for its system of quality control. The SQCS deals comprehen- sibly with a firm’s quality control practices in the areas of audits, reviews, compilations, preparation and attestation engagements. It places an unconditional obligation on a firm to establish a system of quality control designed to pro- vide it with reasonable assurance that the firm and its personnel comply with professional standards and applicable regulatory and legal requirements, and that the reports issued by the firm or engagement partners are appropriate in the circumstances. The significant aspects of SQCS No. 8 include the following:

SQCS No. 8 defines unconditional requirements through the use of the words must or is required and pre- sumptively mandatory requirements through the use of the word should.

SQCS No. 8 identifies the following six elements of quality control to be included in a firm’s quality control system of and addressed in its policies:

Leadership Responsibilities for Quality Within the Firm (the “Tone at the Top”)

Relevant Ethical Requirements

Acceptance and Continuance of Client Relationships and Specific Engagements

Human Resources

Engagement Performance

Monitoring

SQCS No. 8 requires a firm to communicate and document its quality control policies and procedures. The extent of the documentation is based on the size, structure and nature of the firm’s practice.

SQCS No. 8 recognizes the importance of a quality-oriented internal culture by requiring firms to establish policies assigning its management responsibilities for ensuring that commercial considerations do not over- ride the quality of work performed and for addressing personnel performance evaluation, compensation, and advancement to demonstrate the firm’s overarching commitment to quality.

SQCS No. 8 provides detailed guidance on independence and requires a written confirmation of compliance with independence requirements from all personnel at least annually.

SQCS No. 8 provides detailed guidance on client acceptance and continuance, and it requires documentation of the resolution of significant issues.

SQCS No. 8 provides detailed guidance on engagement supervision and review, engagement documentation, and consultation policies and procedures.

SQCS No. 8 requires policies and procedures for addressing and resolving differences of opinions, including a requirement that reports must not be released until the difference of opinions are resolved. Such policies and

1The term personnel is defined in Statement on Quality Control Standards (SQCS) No. 8, A Firm’s System of Quality Control (AICPA, Profes- sional Standards, QC sec. 10), as all individuals who perform professional services for which the firm is responsible, whether or not they are CPAs (including leased and per diem employees who devote at least 25 percent of their time at the reviewed firm in performing audits, reviews, compila- tions, preparation or attestation engagements, or those professionals who have the partner-level and manager-level responsibility for the overall supervision or review of such engagements).

AICPA Peer Review Program Manual

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procedures should enable a member of the engagement team to document that member’s disagreement with the conclusions reached after appropriate consultation.

SQCS No. 8 uses the term engagement quality control review, including its objective, and requires firms to establish criteria to determine which engagements are to be subject to an engagement quality control review.

SQCS No. 8 requires performance of monitoring procedures that are sufficiently comprehensive to enable the firm to assess compliance with all applicable professional standards and regulatory requirements and the firm’s quality control policies and procedures. Firms are required to assign responsibility for monitoring to a person of appropriate authority and are required to evaluate deficiencies and communicate recommendation for remedial action.

SQCS No. 8 requires policies and procedures for dealing appropriately with complaints and allegations of noncompliance with professional standards or with the firm’s system of quality control.

.02 This section of the manual contains a questionnaire, to be provided to the peer reviewer prior to the com- mencement of the review, that provides documentation of the firm’s policies and procedures for its system of quality control. Firms that have developed a comprehensive quality control document (as contemplated by SQCS No. 8) that was effective for the peer review year should provide that document to the peer reviewer. However, under certain circumstances, the team captain may still request that a firm complete this questionnaire (and attach the quality control document). For instance, this could be requested if the team captain’s consideration of the firm’s quality control document indicates that it may not adequately address all the required elements of a system of quality control in a level of detail appropriate to the firm. This could also be requested if the team captain’s consideration of the quality con- trol document indicates that a summary of the document would assist the team captain’s review of it.

.03 Firms utilizing this questionnaire as the primary documentation of their system of quality control (to assist in complying with the documentation requirements of SQSC No. 8) should indicate its date of adoption (which cannot be prior to the date of completion of the questionnaire). If this questionnaire was not in effect for the peer review year, the firm should also attach previously completed questionnaire(s) that were effective for the peer review year, which could be the questionnaire completed for the firm’s last peer review. Firms should keep this questionnaire updated for ongoing changes in their respective practice structure as they would for a quality control document.

.04 This questionnaire has been developed for firms with two or more personnel. Section 4300, Quality Control Policies and Procedures Documentation for a Sole Practitioner With No Personnel, is a questionnaire that has been developed for sole practitioners with no personnel. This questionnaire has been adapted from the requirements of SQSC No. 8 and from the non-authoritative AICPA Practice Aid, Establishing and Maintaining a System of Quality Control for a CPA Firm’s Accounting and Auditing Practice. The AICPA practice aid provides illustrative examples of four hypothetical firms (multi-office firm, single office firm, sole practitioner firm, and an alternative practice structure firm). Firms should understand the requirements of SQCS No. 8 and consider the practice aid when design- ing and maintaining the applicable quality control policies and procedures. The practice aid can be purchased from cpa2biz.com.

.05 The reviewed firm should respond directly with “Yes,” “No,” or “N/A” answers and describe, where appro- priate, the policies and procedures it has in effect that relate to the questions asked. Where appropriate, the firm should make reference to any firm documents that describe those policies and procedures in more detail. Examples of such documents might be personnel manuals, audit and accounting manuals, a quality control document or manual, and firm forms and checklists. A “No” answer to a question does not necessarily indicate a problem with the firm’s system of quality control; however, it may require additional explanation of applicable procedures that the firm has implemented in the circumstances. A firm’s quality control policies and procedures should be sufficient based on the size, structure, and nature of its practice for it to obtain reasonable assurance of complying with professional stand- ards.

.06 When determining the extent of documentation required for this questionnaire, the reviewed firm should consider that “Yes” and “No” answers may assist in identifying the control objective, but it would not typically satisfy the required documentation of how the control was met. Documenting how controls are met is an integral component of documenting the quality control policies and procedures and is expected to be included if the questionnaire is meant to satisfy the requirements of SQCS 8 and be used as the firm’s quality control document. The reviewed firm should document the control objective and the details of the policies and procedures.

PRP §4400.02

Copyright © 2015, American Institute of Certified Public Accountants, Inc.

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Quality Control Policies and Procedures—Firms With Two or More Personnel

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.07 There may be arrangements where certain portions of the reviewed firm’s system of quality control reside at or operate in conjunction with the system of quality control of a non-CPA owned entity with which the reviewed firm is closely aligned through common employment, leasing of employees, equipment, facilities, and so on, or other simi- lar arrangements. This would generally include policies and procedures relating to the following elements of quality control: (1) relevant ethical requirements, (2) human resources, and (3) monitoring of the elements noted in (1) and

(2). If this arrangement applies to the reviewed firm, in addition to section 4400, complete PRP section 5100, Quality Control Policies and Procedures Documentation Questionnaire Supplement for non-CPA Owned Entities Closely Aligned With a CPA Firm.

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.08

AICPA Peer Review Program

QUALITY CONTROL POLICIES AND PROCEDURES DOCUMENTATION QUESTIONNAIRE

2

FOR FIRMS WITH TWO OR MORE PERSONNEL

Firm

Prepared By

Date

This questionnaire may not include all the policies and procedures applicable to a firm’s practice. It should be tailored to provide documentation of pertinent policies and procedures applicable to the six elements of quality control. Some portions of the questionnaire will require a specific response; a “Yes,” “No,” or “N/A” answer may be appropriate in other instances. Some questions may require a brief description of applicable procedures in place. If necessary, addi- tional documentation should be provided. Where appropriate, make reference to any documents that describe those policies and procedures in more detail. Examples of such documents might be audit and accounting manuals and forms and checklists used in the practice.

This questionnaire does not address specific requirements of membership in the AICPA Governmental Audit Quality Center or the AICPA Employee Benefit Plan Audit Quality Center. Additionally, there may be other requirements for firms engaged to perform audit services for an issuer to comply with the Public Company Accounting Oversight Board and the Securities and Exchange Commission (SEC) and for those firms perform- ing engagements subject to Government Auditing Standards.

If the firm is closely aligned with a non-CPA owned entity, and if certain portions of the elements of (1) relevant ethical requirements, (2) human resources, or (3) monitoring reside at or operate in conjunction with the sys- tem of quality control of the non-CPA owned entity, the firm must also complete PRP section 5100, Quality Control Policies and Procedures Documentation Questionnaire Supplement for Non-CPA Owned Entities Closely Aligned With a CPA Firm.

Yes No N/A Comments

A.Leadership Responsibilities for Quality Within the Firm (“Tone at the Top”)

Quality control policies and procedures are required to be documented and communicated to personnel, including the message that each individual has a personal responsibility for quality and to be familiar with and to comply with these poli- cies and procedures.

1. Does the firm have a written quality control document in effect for the peer review year?

a.If “yes,” submit a copy of the firm’s quality control document in effect for the peer review year to your team captain. Completion of this questionnaire may not be required if the quality control document com- prehensively describes the policies and procedures es- tablished and maintained for each element of quality control as contemplated by SQCS No. 8. However, under certain circumstances the team captain may still request that this questionnaire be completed (and the quality control document attached).

2See footnote 1.

PRP §4400.08

Copyright © 2015, American Institute of Certified Public Accountants, Inc.

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Yes No N/A

b. If “no,” will this questionnaire provide the primary documentation of the firm’s policies and procedures for its system of quality control?

If “yes,” indicate date of adoption (cannot be prior to the date of completion of this questionnaire).

Considering the date of adoption, was this question- naire in effect for the peer review year?

If “no,” also attach previously completed question- naire(s) that were effective for the peer review year, if any. This could be the questionnaire completed for the firm’s last peer review, which the firm should be maintaining as documentation of their system of qual- ity control.

If “no,” where are policies and procedures documented?

2. Has the firm developed or adopted other quality control materials?

If “yes,” describe those materials:

3.Describe how the firm communicates its policies and pro- cedures to personnel.

4.Describe how the firm stresses the importance of obtaining feedback on its system of quality control from its person- nel.

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Yes No N/A Comments

Quality control policies and procedures support an internal culture based on the recognition that quality is essential in performing engagements.

5.Describe how the firm’s management assumes ultimate re- sponsibility for the firm’s system of quality control.

6.Describe how the firm assigns management responsibili- ties so that commercial considerations do not override the quality of the work performed.

7.Describe how the firm assigns operational responsibility for its system of quality control to personnel who have sufficient and appropriate experience and ability to identi- fy and understand quality control issues and to develop appropriate policies and procedures, as well as the neces- sary authority to implement those policies and procedures.

8.Describe how the firm designs procedures addressing per- sonnel performance evaluation, compensation, and ad- vancement to demonstrate the firm’s overarching com- mitment to the objective of the system of quality control.

9.Describe how the firm devotes resources for the develop- ment, communication, and support of its quality control policies and procedures.

PRP §4400.08

Copyright © 2015, American Institute of Certified Public Accountants, Inc.

00-11 MAY 2015 Quality Control Policies and Procedures—Firms With Two or More Personnel

Yes No N/A

B.Relevant Ethical Requirements

Quality control policies and procedures provide the firm with reasonable assurance that the firm and its personnel comply with relevant ethical requirements when discharging profes- sional responsibilities. Relevant ethical requirements include independence, integrity, and objectivity. These requirements include regulations, interpretations, and rules of the AICPA, state CPA societies, state boards of accountancy, state stat- utes, the U.S. Government Accountability Office, and any other applicable regulators.

1.Describe how the firm documents and communicates its policies and procedures for relevant ethical requirements to its personnel.

2. Does the firm have access to current guidance materials regarding the applicable independence, integrity, and ob- jectivity requirements?

a.If “yes,” describe the source of such material (such as access through computer software databases contain- ing professional and regulatory literature, by a sub- scription to the AICPA Professional Standards loose- leaf service, other services pertaining to the firm’s practice, or other means).

b.If “no,” describe how the firm obtains reasonable as- surance that it is aware of the applicable independ- ence, integrity, and objectivity rules.

3. Does the firm employ someone responsible for providing guidance, answering questions, monitoring compliance, and resolving matters with respect to independence, integ- rity, and objectivity?

a.If “yes,” identify.

b.If “no,” describe how the firm handles these matters.

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Yes No N/A Comments

4. Does the firm have a system for identifying all services performed for clients, including services performed by en- tities closely aligned through common employment and other means, and evaluating whether any of those services might impair independence?

a.If “yes,” identify the relevant policies and procedures.

b.If “no,” describe how the firm differentiates the types of services performed.

5. Does the firm have policies and procedures in place to ensure the independence of the firm as required by the AICPA, state CPA societies, state boards of accountancy, state statute, the SEC, and other regulatory bodies, if ap- plicable?

a.If “yes,” how is this information documented (for example, memorandum, manuals, and so on)?

b.If “no,” how does the firm obtain reasonable assur- ance that its personnel are aware of the pertinent regu- lations, interpretations, and rulings of regulatory agencies that impact the firm?

6. Does the firm provide its personnel with the firm’s list of clients and any related entities and inform them on a time- ly basis as to any changes in the firm’s clients and any re- lated entities to which independence policies apply?

a.If “yes,” describe how the firm communicates this in- formation to its personnel.

b.If “no,” describe how the firm ensures that all person- nel are aware on a timely basis of those entities to which independence policies apply.

PRP §4400.08

Copyright © 2015, American Institute of Certified Public Accountants, Inc.

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Yes No N/A

7. Does the firm obtain written confirmation, upon hire and on an annual basis, of compliance with its policies and procedures on independence from all personnel required to be independent by relevant requirements? (If “no,” the firm may not be in compliance with SQCS No. 8, which requires written confirmation, at least annually.)

If “no,” explain.

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The firm, when acting as principal auditor, confirms the inde- pendence of another firm performing parts of an engagement.

8.Does the firm have any engagements where it acts as prin- ciple auditor or accountant and another firm of CPAs is engaged to perform segments of the engagement?

a.If “yes,” are written confirmations obtained regarding the other firm’s independence with respect to audit engagements and either written or oral confirmations obtained for review or attestation engagements?

If “yes,” describe the form and content of the confir- mation.

9.Has the firm identified circumstances for which documen- tation of the resolution of independence, integrity, and ob- jectivity questions is required?

a.If “yes,” describe such circumstances and where the documentation is maintained.

b.If “no,” describe how the firm handles these matters.

10.Has the firm found it necessary within the last year to con- sult with individuals outside the firm on independence, in- tegrity, or objectivity concerns?

If “yes,” describe.

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Yes No N/A Comments

11. Does the firm review unpaid fees from clients to ascertain whether any outstanding amounts may impair the firm’s independence?

a.If “yes,” answer the following questions:

i.Who does this?

ii.How often is it done?

iii.Have there been any such situations during the year under review?

b.If “no,” describe how the firm monitors its independ- ence with respect to clients with unpaid fees.

12. Does the firm inform its personnel of financial or other re- lationships that may impair independence and that may be prohibited?

a.If “yes,” do those relationships include the following?

i. Business relationships with clients or with non- clients that have investor or investee relationships with clients

ii. Loans to and from clients, including loans from financial institution clients

iii. Family members who are employed by clients, or who are in director, officer, manager, or audit- sensitive positions with clients, including not-for- profit entities

iv. Past-due fees for professional services

v. Accounting or advisory services that have evolved into situations where the firm has assumed some of the responsibilities of client management

vi. Direct and material investments in clients

PRP §4400.08

Copyright © 2015, American Institute of Certified Public Accountants, Inc.

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