Reviewers use the criteria below to determine whether to include a matter in the report or in a letter of comments (LOC):

• System reviews: Matters that 1) resulted in a modification to the reviewer's standard report or 2) create a condition where the firm has more than a remote possibility of not conforming to professional standards or the firm's standards of quality.
  

• Engagement reviews: Matters that 1) resulted in modification(s) to the reviewer's standard report or 2) departures from professional standards that are not deemed to be significant departures, but should be considered by the reviewed firm in evaluating the quality control policies and procedures over its accounting practice. Isolated deficiencies are excluded from an engagement report or LOC.

If a finding in a current review is similar to one noted in the firm's previous review, the reviewer notes that fact in the LOC finding. The reviewer's consideration is different for system and engagement reviews. As a result, the firm's response to repeat findings is different.

The reviewer's considerations:

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Firm's Response to a Repeat Finding

• System Reviews. The response to a repeat finding should be different from the previous response from the prior peer review.  A change in the response is necessary  under the assumption that the corrective action indicated in the previous response was not sufficient to prevent the recurrence of deficiencies noted.   Or perhaps the previous response partly resolved the issue, but a more refined actions is necessary.
  
• Engagement reviews. The response to an engagement review repeat finding should address the overall category to which the finding applies. Although a reviewer does not evaluate systemic deficiencies in an engagement review, the firm should assess the likely systemic causes when preparing its response.

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Common LOR Deficiencies

• Responses are not included for all findings noted in the report and/or letter of comments
• Responses to repeat findings are the same as in the previous peer review. If the prior response did not fix the problem, then the response will need to be refined or changed.
• The response acknowledges a deficiency, but does not identify a corrective action that will prevent similar deficiencies from recurring.
• Responses to recommendations are too general to effective remedy the findings noted. (An example of an overly general response is, "We will remind personnel to follow professional standards."
• Corrective action described in the response is vague or does not appear to be sufficient to prevent the deficiencies like those noted in the reviewer's finding.
• Responses address only the deficiencies noted in specific engagements rather than the broader underlying system deficiency.