Peer Review Guide

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Engagement Review
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Updated 2/13/2005

Peer Review Guide > Report and LOC Guide > Engagement Performance

System LOC: Engagement Performance

Quality Control Requirements
Index to Findings: Sample symptoms and systemic causes with links to sample wording 

Quality Control Requirements:

A firm should have in place policies and procedures that provide it with reasonable assurance that:

  1. Engagement work meets professional standards, regulatory requirements and the firm's standards of quality.
  2. All phases of the design and execution of the engagement are covered, including planning, performing, supervising, reviewing, documenting, and communicating the results of the engagement.
  3. Personnel have available and refer to authoritative references, whether literature or other sources, and consult when appropriate with individuals within or outside the firm who have the appropriate level of knowledge, competence, judgment and authority.

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Index to Findings: Sample Symptoms and Systemic Causes


       REPORTING ISSUES
Finding Symptom Policy/Procedure Weakness
e01 Inappropriate financial statement titles used in report. Lack of policy or procedure to determine adequacy of reports.
e02 Report covering financial statements prepared on a basis required by a regulatory agency does not conform to professional standards. Engagement review procedures not appropriately comprehensive.
e03 Inappropriate financial statement titles used in the report. Did not follow policy to use reporting checklist.
e04 Report wording departures. Unfamiliarity with the reporting checklist questions.
e05 Supplementary information not reported on. Issue not identified during the engagement review process.

     FINANCIAL STATEMENT DISCLOSURE MATTERS
Finding Symptom Policy/Procedure Weakness
e20 Omitted disclosures in the financial statements. Lack of a policy to determine disclosure completeness.
e21 Omitted disclosures in the financial statements. Engagement review procedures not appropriately comprehensive.
e22 Omitted disclosures in the financial statements. Did not follow policy to use disclosure checklist.
e23 Omitted disclosures in the financial statements. Unfamiliarity with disclosure checklist questions.
e24 Inappropriate answers noted on some disclosure checklist questions. Disclosure materiality not consistently considered for some financial statement elements.
e25 Several disclosure, reporting and presentation deficiencies were noted. Firm used a condensed rather than a comprehensive disclosure and reporting checklist.
e26 Financial statement format and disclosure departures from GAAP. No procedure for monitoring the contents of the firm's library.

       ENGAGEMENT PROCEDURE MATTERS
Finding Symptom Policy/Procedure Weakness
e40 Specialized industry audit procedures not performed. Lack of the use of tailored audit programs.
e41 Management representation letters not tailored for specialized engagements. The firm did not comply with its requirement to tailor representation letters.
e42 Lack of consultation when it would have been appropriate to consult. Consultation situations not identified.
e43 Misapplication of a generally accepted accounting principle. Did not follow policy to seek proper consultation.

       ENGAGEMENT DOCUMENTATION MATTERS
Finding Symptom Policy/Procedure Weakness
e60 Inadequate audit planning documentation. No specific procedure for documenting audit planning.
e61 Lack of documentation of internal control risk assessment. Policies do not require documentation of control risk.
e62 Lack of audit planning documentation. Did not follow audit program documentation requirements.
e63 Lack of documentation of communication of reportable conditions. Did not follow policy to document communication of reportable conditions.
e64 Lack of sampling documentation. Workpaper policies do not require documentation of sampling.
e65 Lack of documentation of workpaper review. Lack of policy specifying the nature and extent of review.
e66 Lack of documentation of some compilation and review procedures. No review procedure for ensuring that all procedures are performed.
e67 Material audit documentation deficiencies. Policies do not address the form and content of workpaper documentation.

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Peer Review Guide > Report and LOC Guide > Engagement Performance