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CPCAF System Reviews Engagement Review Report Review
LOR Samples Updated 2/13/2005 |
Peer Review Guide > Sample Peer Review Letters of Response This document contains sample letters of response (LOR) for system and engagement reviews. The firm should tailor it's actual letter of response to address the specific recommendations made by the reviewer. System Review: Unmodified | Modified | Modified - Scope Limitation | Adverse Engagement Review: Unmodified
| Modified | Adverse System Review LOR - Unmodified [Date] [Addressed to peer review committee of the administering entity] Ladies and Gentlemen: This letter represents our response to the report and letter of comments issued in connection with the review of its accounting and auditing practice for the year ended June 30, 20XX. The matters discussed herein were brought to the attention of all personnel at a training session held on September 10, 20XX. In addition, the matters discussed in this letter will be given special emphasis in our monitoring procedures. Financial Reporting and Disclosure Checklists - All professional personnel were reminded of the importance of complying with the firm’s policy requiring completion of its financial reporting and disclosure checklist at the training session held on September 10, 20XX. In addition, the firm’s engagement review questionnaire is being revised to require the engagement partner to document his or her review of the completed checklist. (The engagement review questionnaire is a brief form completed by the engagement partner and the manager at the conclusion of an audit to document their completion of their assigned responsibilities.) Responsibility for Reference Library - The responsibility for keeping the firm's reference library comprehensive and up-to-date and for advising professional personnel of additions to the library has been assigned to an experienced audit manager. Current editions of industry audit and accounting guides have been ordered. Monitoring - A partner of the firm has been designated as responsible for summarizing the findings on the firm’s annual inspection and monitoring the actions taken as a result of those findings to prevent their recurrence. We believe these actions are responsive to the findings of the review. We believe these actions are responsive to the findings of the review. Sincerely, [Name of the firm]
Top of Page System Review LOR - Modified Report December 23, 20XX [Addressed to the peer review committee of the administering entity] Ladies and Gentlemen: This letter represents our firm's response to the report and letter of comments issued in connection with the review of its system of quality control for the year ended June 30, 20XX. The matters discussed in this letter will be monitored to ensure that they are effectively implemented as part of our system of quality control. Deficiency that resulted in a modified report The firm modified its quality control policies and procedures to require a greater emphasis of partner involvement in the planning stage of all audit engagements. In addition, we identified review engagements that are sufficiently large or complex to warrant partner involvement in the planning stage. The revised policies and procedures require the engagement owner to document his or her timely involvement in the planning process in the planning section of the written work program. The importance of proper planning, including timely partner involvement, to quality work was emphasized in the training session referred to previously. Comments that did not result in a modified report The firm has issued a current and up to date client list for all staff to review. The client list will be distributed each time a client has been accepted by the firm. In addition, all staff will be reminded that any possible independence issues should be brought to the attention of the managing partner immediately. In response to the comment regarding non-disclosure compilations reports, we will immediately revise the report language to conform to professional standards. The firm has implemented a quality control policy for a technical manager to review each accounting and auditing report to ensure the reports conform with professional standards. We believe these actions are responsive to the findings of the review. Sincerely, [Name of Firm] Top of Page System Review LOR - Modified Report for a Scope Limitation December 23, 20XX [Addressed to the peer review committee of the administering entity] Ladies and Gentlemen: This letter represents our response to the report and letter of comments issued in connection with the firm’s review of its system of quality control for the year ended June 30, 20XX. The matters discussed below were brought to the attention of all professional personnel at a meeting held on December 20, 20XX. The matters discussed in this letter will also be monitored to ensure that they are effectively implemented as part of our system of quality control. We concur with the comments of the reviewer. We will require that a current financial disclosure checklist be completed and reviewed by the engagement partner for each engagement issued by the firm. We have also revised audit procedures to require that the management representation letter covers both years when comparative financial statements are issued and this will be included in the partner review. We believe these actions are responsive to the findings of the review. Sincerely, [Name of Firm] Top of Page System Review LOR - Adverse Report September 23, 20XX [Addressed to the peer review committee of the administering entity] Ladies and Gentlemen: This letter represents our response to the report issued in connection with the firm’s review of its system of quality control for the year ended June 30, 20XX. All issues have been brought to the attention of the professional staff at a meeting held on September 22, 20XX. In addition, steps have been added to our monitoring procedures to review the deficiencies noted in the report so that they will not happen again. Several of the deficiencies noted by the review team included missing or incomplete audit and review documentation. Specifically noted were audit programs were not adequately completed or missing, evaluation of the results of sample selection and other documentation deficiencies. All audit partners will immediately be required to complete a documentation checklist that will be tailored to cover the requirements of specialized industries, if necessary. In addition, we have implemented a concurring partner review on all audits and reviews engagements to determine if the audit documentation supports the audit opinion. The firm has contacted two other accounting firms with expertise in development stage companies and other industries that are similar to ours. We have implemented a plan with these other accounting firms to review our work to make sure we are in compliance with professional standards and to consult when needed. We have revised our policies and procedures to require a senior manager to review all review engagements for the documentation required by professional standards. The senior manager will be using a reviewing checklist that contains questions regarding management representation letter for each year reported on, and documentation of accountant’s inquiry and analytical procedures. At the staff meeting, the staff was reminded of the importance of completing a disclosure checklist. Within the next few weeks all professional staff will be attending a CPE course in disclosures. In addition, the managing partner will be holding a training class on the proper completion of a disclosure checklist and who to ask if staff is unsure of any question. Our firm administrator has created a client acceptance file. The file will contain the new and continuing client acceptance forms that will cover the considerations and conclusion of each client accepted by the firm. In addition, the managing partner will periodically review the files to determine if appropriate conclusion were reached. Sincerely, [Name of Firm] Top of Page Engagement Review LOR - Unmodified Report September 15, 20XX [Addressed to the peer review committee of the administering entity] Ladies and Gentlemen: This letter represents our response to the letter of comments on the engagement review of our firm’s accounting practice for the year ended June 30, 20XX. To prevent the recurrence of the reporting deficiencies noted by the reviewer and to prevent other reporting deficiencies from occurring, we have obtained copies of a comprehensive reporting and disclosure checklist. These checklists will be completed on all review engagements and on all compilation engagements. To prevent the incorrect titles being used on our reports and to ensure that computer-generated compiled financial statements prepared on a basis of accounting other than generally accepted accounting principles reflect the appropriate titles, we have established a manager review of all reports and financial statements prior to issuance. We will review professional standards governing the information to be included in engagement letters for financial statements prepared under SSARS No. 8. We believe these actions are responsive to the findings of the review. Sincerely, [Name of firm] Top of Page Engagement Review LOR - Modified Report September 15, 20XX [Addressed to the peer review committee of the administering entity] Ladies and Gentlemen: This letter represents our* response to the letter of comments on the engagement review of our firm’s accounting practice for the year ended June 30, 20XX. Matters that resulted in a modified report As recommended by the reviewer, the entire staff has participated in continuing professional education related to reporting and disclosures. We will be performing a preissuance review by a partner not associated with the engagement to make sure that the accountant’s report is appropriately modified when the financial statements depart from professional standards. Management representation letters will be obtained for all future review engagements issued by the firm. The firm has required that a manager review each engagement to ensure that the management representation letter is obtained and that all the required documentation is included in the working papers. The firm reviewed professional standards regarding reporting on comparative financial statements and going concern issues and will have a manager review these items on all future reports and financial statements and reports. Matters that did not result in a modified report We will put into practice a reporting and disclosure checklist for all engagements to be completed by staff. The checklist will be reviewed by the partner in charge of the engagement. The reporting and disclosure checklist will cover presentation of statement of activities issued by this firm and will be updated as new pronouncements are issued to ensure all disclosures are included in the financial statements. The firm has obtained the appropriate state board of accountancy license to perform engagements and issue reports. We believe these actions address the deficiencies and comments noted by the reviewer. Sincerely, [Name of firm] Top of Page Engagement Review LOR - Adverse Report September 15, 20XX [Addressed to the peer review committee of the administering entity] Ladies and Gentlemen: This letter represents my response to the report on the engagement review of my firm’s accounting practice for the year ended June 30, 20XX. To prevent the recurrence of the deficiencies noted by the reviewer and to prevent other such deficiencies from occurring, we will review the professional standards related to the deficiencies and ensure that the professional standards will be complied with on all future engagements. Specifically, we have implemented a partner review to ensure that all management representation letters are obtained for all review engagements issued by the firm. All professional staff who work on accounting engagements will be participating in continuing professional education in disclosures and reporting to correct the disclosure and reporting deficiencies noted by the reviewer. In addition, we have started using a third-party reporting and disclosure checklist to ensure all reporting and disclosure matters are appropriately addressed. We are now using a third-party checklist for all SSARS No. 8 engagements to ensure that all requirements of professional standards are adhered to. We believe these actions are responsive to the findings of the review. Sincerely, [Name of firm] Top of Page Peer Review Guide > Sample Peer Review Letters of Response Updated: February 13, 2005 |