Christopher R. Cicalese, CPA, MSTFP, Alloy Silverstein Accountants and Advisors
| March 7, 2023
The accounting profession is always evolving and updating the professional standards that practitioners follow when completing their work. Although there is no formula for perfection, as each engagement stands alone, below are four things that should be standardized in a firm to maintain quality work product:
1. Have Proper Sign Offs
Although a basic concept, having the proper sign offs is vital to maintain quality work and pass peer review. In the real world, an engagement may not necessarily follow the standard timeframe and could easily be derailed by a slight conflict. While things happen, it is important to remember that some procedures follow a specific timeframe especially during an audit. For example, planning does not happen after the workpapers are complete nor would final procedures be completed first. The proper order typically starts with engagement acceptance as well as planning and preliminary analytical procedures if applicable. This portion of documentation should be signed off first. The main procedures would be signed off next and then concluding with the final procedures such as final analytical if applicable. In the event that a practitioner does not sign off on their work in the proper order, it could give the peer reviewer the interpretation that they may not have designed their procedures based on the actual client.
2. Obtain Documentation
During an engagement, there is an expectation that the CPA will obtain the proper documentation to substantiate their findings. If the primary documentation is not available, the CPA should adjust their procedures accordingly. While going through standard procedures and completing programs and checklists, it is vital that the materials being used are up to date so that the proper steps are taken and suggested documentation is obtained. Often, the programs are intuitive enough to help guide firms to better complete the work to an acceptable professional standard as well as provide a knowledge base to ensure that a new standard is not overlooked by the practitioner. If a firm is not well versed in certain aspects of an engagement, some standardized programs provide detailed descriptions of the procedures to be taken in order to complete the section of work.
3. Properly Identify Risks
In relation to the first and second points, not following the proper order can often lead to improper testing and procedures. When incorrect or outdated standards are being followed, it is possible for a practitioner to assess risk as low but still perform the procedures similar to a high-risk assessment. Inversely, some practitioners could not perform enough procedures and have a risk assessment that’s too high. As this can be common in the industry, many standard templates included in software subscriptions provide some guidance on helping identify risks and figuring out what procedures to perform based on assessments.
4. Leverage Continuing Education
Lastly, all staff working on the engagements should maintain their proper continuing education requirements. If team members do not attend the proper accounting and auditing update courses each year, they are more likely to miss updates to prior standards. Different engagements and licensing may also require specific topics such as government accounting standards (GAS) or employee benefit plans (EBP). If someone doesn’t have the proper knowledge for an engagement and the practitioner is not able to get the proper staff to complete it, then it would not be appropriate to complete that engagement.
While these mistakes may seem trivial, unfortunately many in our profession may inadvertently come across these issues at their firm. Not only is it important for leadership to be aware of these common issues, but each level of the team should be educated on what to do to make sure an engagement would pass peer review. Clients and users of financial statements have an expectation that the practitioner performed high-quality work when preparing financials, so it’s important for practitioners to not only avoid these issues during peer review year but maintain the same quality control from year to year.