PPC Examination Reports

Elimination of Peer Review of Quality Control Materials

On February 2, 2022, the AICPA Peer Review Board approved final clarified peer review standards,
Clarification of AICPA Standards for Performing and Reporting on Peer Reviews
. The clarified peer review standards replaced and restructured all existing peer review guidance and were effective for peer reviews starting on or after May 1, 2022. Under the prior peer review standards, providers of quality control materials (QCM) could voluntarily elect to undergo a peer review of their system for the development and maintenance of their QCM. QCMs are guidance, work programs, checklists, manuals, tools, etc., including industry and subject-matter-specific materials, that are integral to the operation of a firm’s system of quality control and promote consistency in performing engagements, such as PPC Guides and practice aids. When a provider of QCM received a peer review report under the prior peer review standards with a pass rating, firms using those materials had reasonable assurance that the materials were reliable resources to assist firms in conforming with the professional standards included in the materials. With the issuance of the clarified peer review standards, the guidance for performing and reporting on reviews of QCM was removed from the peer review standards thereby eliminating that option for QCM providers.

Resources and the Quality Control and Quality Management Standards

SQCS No. 8,
A Firm’s System of Quality Control
, contains the existing authoritative guidance for determining whether a resource is appropriate for a firm’s system of quality control, and that guidance puts the responsibility on the firm to establish and maintain its system of quality control. Further, SQCS No. 8 requires that firms establish policies and procedures to provide reasonable assurance that they perform their engagements in accordance with professional requirements, including promoting consistency in the quality of engagement performance. That guidance points specifically to the use of QCM as a common method used by firms to promote such consistency. Statement on Quality Management Standards (SQMS) No. 1,
A Firm’s System of Quality Management
, was issued in June 2022, is required to be implemented by December 15, 2025, and provides guidance on the use of resources as part of a firm’s system of quality management (SQM).
The framework of SQMS No. 1 is supported by 8 interrelated quality management components. One of those components is resources. This component includes a requirement that a firm (1) obtain or develop, implement, maintain, and use appropriate technological resources to permit operation of the firm’s SQM and performance of engagements; (2) obtain or develop, implement, maintain, and use appropriate intellectual resources to permit the consistent performance of quality engagements and the operation of the firm’s SQM; and (3) determine that human, technological, and intellectual resources obtained from the service providers are proper to use for the firm’s SQM and in performing engagements. SQMS No. 1 defines a service provider as an individual or organization external to the firm that provides a resource used by the SQM or in performing engagements.
Thomson Reuters meets the definition of a service provider for firms that use our products as resources in their SQM. The guidance and practice aids in many of our PPC-branded products would be considered intellectual resources for purposes of addressing this component of the firm’s SQM.

Assertion-based Examination Engagement of PPC QCM

Due to the elimination of the peer review of QCM, providers of QCM may now elect to have a practitioner report on their QCM in an assertion-based examination engagement under the Statements on Standards for Attestation Engagements (SSAEs). In November 2022, the AICPA issued an exposure draft,
Proposed Criteria for a Description of the Content of Quality Control Materials (QCM) and the Content of QCM Related to the Relevant Standards and Interpretative Guidance
(QCM Proposed Criteria ED), that, once finalized, would establish criteria against which the practitioner could examine the QCM under the attestation standards. The QCM Proposed Criteria ED is expected to be finalized during 2024.
Thomson Reuters has elected to subject 26 of its products to assertion-based examination engagements using the criteria in the QCM Proposed Criteria ED. The examination reports will be included in the product edition year’s link as the reports become available.  Depending on the timing of future editions of our products and future examination engagements, the most recent examination report may refer to either a current or previous edition of a product. While the examination engagements will be evaluating whether each of our products is presented in accordance with the content and description criteria included in the QCM Proposed Criteria ED, the examination reports won't express an opinion on whether the quality control materials are reliable resources. However, the examinations will help CPA firms that use our products to address the risks associated with their use and whether they are proper to use for the firm’s SQM and in performing engagements.

Examination reports

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