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Definition of Terms:
PICPA Philippine Institute of Certified Public Accountant
VQARP PICPA Voluntary Quality Assurance Review Program
QAR or Review or Assignment PICPA Quality Assurance Review
Director QAR Director
Division QAR Division
Team QAR Team
Reviewer or Examiner a Team or an individual assigned to do a QAR
Leader QAR Team Leader
Practitioner A sole public practitioner, a partner affiliated with an auditing
firm, or an auditing firm composed of a number of partners
Engagementthe practitioners engagement which is the subject of a review
Code of EthicsIFAC Code of Ethics
Report the QAR Report prepared by the Team after a Review
Inspection/Fieldwork QAR procedures done at the practitioners premises
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CPAs preferably from the education sector, who are PICPA-members in good
standing,
not currently engaged in public practice,
have finished the Training Module for QAR Examiners and have passed a
written examination for Certified QAR Examiners, and
have undergone a satisfactory evaluation by the QAR Director. (1.32(a)
(b).1.52
contracted by the Division on a per review basis, and shall not be full-time
employees of PICPA
CPAs in other sectors (i.e. commerce and industry and government) who meet
equivalent qualifications, training, certification and evaluation requirements shall
also be qualified as Certified QAR Examiners.
AQAR team shall be organized by the Director for every review and shall be
composed of an appropriate number of examiners to accomplish the review within a
reasonable time. The designated team leader shall estimate the number of
manhours to complete the review, and the budget, for final approval of the QAR
Director.
The QAR Director shall select and organize the QAR team composed of a leader and
members for each
review on the basis of meritocracy. In forming and selecting the team for each
assignment the Director
shall be guided by the following considerations:
a.
b.
c.
d.
e.
f.
To establish independence, the Leader and team members must not have a financial
or professional interest in the practitioner and the engagements that will be
examined. The leader or member of the QAR Team of the previous three
consecutive QARs of the practitioner shall not be part of the current team, to
establish a cool-off period.
Depending on the size and complexity of the practitioner under review, the Director
shall assign a
team leader and a number of member/s for each review. The QAR team leader
shall:
a.
b.
c.
c.
d.
e.
be responsible for preparing the main QAR report and other applicable
QAR-related documents.(1.55)
Definition of Practitioner
The subject of the QAR, herein called as Practitioner shall either be an individual
practicing as a sole owner of a practice, an individual practitioner (i.e. partner)
belonging to an auditing firm, or an auditing firm consisting of a number of partners
who voluntarily subjects his/their practice to a QAR, for a consideration and as
provided for in this Framework.
Levels and Objectives of Review
For each QAR engagement, quality assurance is addressed at two levels: the
practitioner level and the engagement level. (1.3). At the practitioner level, the
adequacy of the quality control policies and procedures are reviewed to determine
whether they comply with ISQC 1. At the engagement level, selected engagements
are reviewed to determine whether the selected engagements have complied with
professional standards, regulatory requirements and the practitioners policies and
procedures.
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For each review assignment, the reviewer shall sign a standard contract (QAR Form
_____) laying the terms of for remuneration, timeline, deliverables, and an
undertaking of confidentiality and non-competition. The Team shall consider the
fundamental principles set out in the Code of Ethics. These include integrity,
objectivity, professional competence and due care, confidentiality and professional
behavior.
III. REVIEW PROCESS AND DOCUMENTATION
Understanding the Practitioners Policies and Procedures
In performing a VQAR, the Reviewer shall obtain a sufficient understanding of:
The nature and extent of the practitioners audit practice and the
methodologies used;
The design of the system of quality control of the practitioner;
The practitioners ethical and independence policies and procedures ;
and
The practitioners training policies and procedures; (1.46)
Inspection Procedures
To evaluate the quality control policies and procedures as to their conformity and
compliance with
ISQC 1 and ISA 220 and regulatory and policies at the practitioners level and
selected engagements,
the Reviewer shall perform the following procedures:
a.
b. All requirements shall be rechecked if met including the audit files of the
engagements to be reviewed.
c. All matters obtained during the inspection are documented. The
inspection is performed, using Peer Review Checklist Form ____ for the
practitioner level review. Compliance with ISQC 1 is determined through
reviews of administrative files and engagements, inquiry with personnel
and observation.
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For subsequent reviews, the Reviewer should also obtain the practitioner's most
recent QAR report and documentation regarding any litigation that the practitioner
has been involved in since the last QAR.
Documentation
The Team shall maintain documentation that supports the work performed,
including findings and recommendations.
The Team shall document matters that:
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On the last day of the review, the practitioner and engagement level review
findings and results are consolidated to assist in preparing for the closing
meeting and drafting the Leaders Report, using QARP Form ___.
Closing meeting with the audit teams reviewed shall be held and findings,
comments and observations shall be reviewed, and any exceptions are
cleared.
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REPORTING
The Team shall hold a closing meeting with the practitioner to discuss the results,
findings,and recommendations for corrective actions, if any.
Reporting to Practitioner
a. Within fifteen (15) days after the closing meeting with the reviewed
practitioner, the QAR Report (QARP Form __) is drafted, reviewed and sent to
the practitioner.
b. TheDraft Report is submitted to the Director for review and approval.
c. The approved Report as signed by Leader, is addressed and sent to the
reviewed practitioners management.
Contents of the QAR Report
The QAR Team Leader shall issue a written report to the reviewed upon completion
of each QAR assignment. The report shall include the following portions:
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Response of Practitioner
The reviewed practitioner shall provide a timely written response to the findings and
recommendations of the QAR report, including planned actions and expected time
of completion or implementation. The response shall be addressed to the QAR
Director through the Leader, not later than fifteen (15) days after receipt of the
Report. The response to the Report (QARP Form ___) should address all matters
contained in the report and should present the Teams comments, observations, and
findings and the practitioners response with action steps to be taken.
A template, intended to achieve a certain degree of uniformity in style and format,
shall be used as a guide for the reviewed practitioner.
Corrective Measures
After receiving the practitioners response the QAR Director, through the QAR Team
Leader shall
recommend the following possible corrective measures that the reviewed
practitioner may apply to his
practice:
requiring revisions or additions to quality control policies and procedures or
audit methodology;
requiring additional CPD;
requiring additional QARs;
POST-REVIEW
Ownership and Custody of the Working Papers
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All findings from the review shall be documented properly and the working papers
shall be the property of the Division. Archives of the working papers postengagement shall be in the custody of the Division.
Consistent with the practice as applied to audits of financial statements and as
required by professional
standards, regulation and law, the timeframe of retaining documentation of
accomplished QARs shall
be long enough to allow PICPA or its oversight body, if any, to maintain appropriate
oversight of the QAR
process. (1.50)
Confidentiality
The QAR team shall follow confidentiality requirements similar to those established
for professional
accountants performing audits of financial statements. As stated in the Code of
Ethics or relevant national ethical requirements, and where not forbidden by law,
practitioners under review shall be exempted from professional client confidentiality
requirements concerning audit engagement working papers for the purpose of
QARs. (1.66)
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