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Updated 2/13/2005

Peer Review Guide > Report and LOC Guide > Sample LOC Findings

a01
Back to Acceptance and Continuance Index

Symptom: Lack of documentation of communication with predecessor auditors
System Cause: Policies to document communication not followed

Comment - The firm's policies and procedures require that communication with a predecessor auditor of a prospective client be documented. During our review, we noted an instance where there was no documentation of communication with a predecessor auditor. However, we were informed by the firm's personnel that the required communication had been made orally.

Recommendation - The firm should stress to it professional staff the importance of its policy to require that communication with predecessor auditors be documented.

a02
Back to Acceptance and Continuance Index

Symptom: Lack of documentation of consideration of client acceptance
System Cause: Did not follow firm's evaluation and documentation policy

Comment - The firm's quality control policies and procedures specify criteria that should be considered when making client continuance decisions and requires that such decisions be documented. During our review, we were unable to determine whether client continuance decisions had been made in accordance with the firm's policies. However, we were informed by the firm's owners that continuance decisions are discussed informally and that continuance is assumed by staff in the absence of instructions to discontinue service to the client.

Recommendation - The firm should comply with its policies and procedures by periodically evaluating its existing clients in accordance with the criteria set forth by its quality control policies and procedures. The firm should also document such evaluations and decisions as required by firm policy, possibly through the use of a standardized form that could be examined as part of the planning process.

a03
Back to Acceptance and Continuance Index

Symptom: Lack of documentation regarding new client acceptance
System Cause: Did not follow firm's documentation policy

Comment - The firm's quality control policies and procedures regarding new client acceptance require the preparation and approval of a new client acceptance form to document the considerations and conclusions. During our review, we noted that the form was not prepared for all new clients. However, we were informed by the firm's owners that appropriate consideration had been made in each case.

Recommendation - To ensure that all appropriate facts are considered when accepting a new client, the firm should comply with its policy of documenting its considerations and conclusions by completing the new client acceptance form for each new client.

Peer Review Guide > Report and LOC Guide > Sample LOC Findings