Prp 4400 Form – Fill Out and Use This PDF

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.

.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.

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.

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.

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.

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