Change in Documentation of QC System

If you've used a peer review form to document your QC system, change is coming

If your firm has previously documented its system of quality control using a peer review form, be aware that change is coming. The AICPA has historically provided a form upon which CPA firms could document their quality control system for system reviews. (Many small CPA firms have not created a written quality control document and have used this alternative method–a peer review form–to document their QC systems.)  Starting January 1, 2017, the checklists (PRP Sections 4300 and 4400) will no longer be available, and the AICPA is saying that “firms should use other resources to document their systems of quality control.”

QC Documentation

AICPA Quality Control Practice Aids

The AICPA offers practice aids to assist you in developing and documenting your system of quality control. Click here to see those practice aids. The AICPA “grant(s) users permission to copy and incorporate portions of the work as necessary.”

25 Products I Use as an Accountant

Accounting Office

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Here’s a list of accounting products that I use as an accountant and auditor:

  1. Governmental Accounting, Auditing, and Financial Reporting GFOA Blue Book
  2. Evernote (as my digital cloud library)
  3. Sharefile (as my secure means to transfer information)
  4. Caseware (electronic trial balance and working papers)
  5. Excel
  6. Word
  7. Adobe Acrobat Pro DC (PDF maker)
  8. Apple iPhone
  9. Apple iPad
  10. Dell laptop
  11. Three extra monitors
  12. Standup desk
  13. Zoom (conferencing software)
  14. Checkpoint (Thomson Reuter’s electronic guides)
  15. CheckpointLearning (Thomson Reuter’s online CPE)
  16. WordPress (blogging software)
  17. LinkedIn (to participate in accounting groups)
  18. Fujitsu i500 scanner
  19. Keynote (an alternative to PowerPoint)
  20. Outlook (for email)
  21. Fantastical (iPad calendar app)
  22. Basecamp (cloud project management software)
  23. Livescribe 3 Smartpen
  24. 1Password (to store and retrieve passwords)
  25. Amazon Tap (for music)

I use all of the above products with the exception of the stand-up desk. The desk I use is from Levenger; it appears they’ve discontinued that model.

What products do you recommend for accountants?

Note: I do receive affiliate commissions on Amazon products.

I am looking forward to the 2016 NAAATS Conference. Hope to see you in Salt Lake.

Date:July 21, 2016—July 22, 2016
Event:AICPA NAAATS Conference

How to Review Working Papers and Still Win Friends and Influence People

Lessening tension in the review process

Bill calls Janet saying, “You can review the working papers. We’re two days past the deadline, so we need to turn this one around today. Sorry for the late notice.”

Picture is courtesy of

Picture is courtesy of

Janet feels her blood pressure rise and taps her fingers on the desk. “I have three other audits queued up for review. Which partner do you want me disappoint?”

The conversation goes silent. Tension fills the air. Still more silence.

“I’ll see what I can do, but please give me more advance notice in the future. This is the third time this has happened in the last few months.”

Janet begins reviewing the working papers. As is her habit, she starts with the engagement letter, but it’s nowhere to be found. She makes a review note. The risk assessment documentation looks good. She thinks to herself, “The walkthroughs have improved, analytics are better, and the planning document has a nice summary of risks and responses.”

She reviews the financial statements, seeing only one deficiency–the fair value note needs improvement.

She calls Bill to advise him of the disclosure change. He hears her words, still laced with tension. A pang of guilt washes over him. He wishes he would have completed this job sooner—and the last two engagements.

As Janet is completing Bill’s review, she receives two phone calls concerning the other jobs. When will she be done? What is taking so long?

How Bill Can Win Friends and Influence People

Bill needs to provide Janet with adequate time for reviewing working papers. Granted, timeliness can’t always happen. But give as much advance notice as possible. Bill knows the job is running late. Calling Janet two days earlier–to let her know the job will need a quick turn-around–would be a big help.

Bill should also let Janet know that certain documents–such as the engagement letter–are not in the file and why.

Bill may need some assistance in project management. If “this is the third time this has happened,” maybe Bill needs to take some continuing education regarding efficiency and organization.

How Janet Can Win Friends and Influence People

Let’s face it. The pressure in public accounting is unrelenting, so finding the better angels of our nature can be challenging. But this we know: Janet will foster greater cooperation with patience. Friction is not your friend.

Few people enjoy having their work reviewed, so reviewers do well to critique kindly. We need to be clear regarding suggested corrections, but–more than anything–we need to be respectful.

While I understand Janet’s “this is the third time” comment, these words need to be avoided–until a later date, after the tension fades. Should Janet address the problem with Bill? Yes, but save the conversation for another day.

Where possible, emphasize improvements. Janet noticed the risk assessment documentation is better. Including this positive review note goes a long way in “winning friends and influencing people.”

The firm needs a policy that clearly defines the review process. Generally, work should be reviewed on a first-in, first-out basis. There will be exceptions; but if people–like Bill–repeatedly turn work in late, the managing partner may need to provide direction. If there are multiple “Bills,” Janet’s review role can become overwhelming.

Here are some suggested guidelines firms can use:

  • Engagements will be reviewed on a first-in, first-out basis
  • Feedback will be in writing
  • Feedback will be respectful
  • Feedback will be timely (if the reviewer waits a week to complete a review, the audit team may not be available for clearing the comments)
  • Reviewers will accumulate summaries of findings on a firm-wide basis (then the firm can develop continuing education classes to remediate the issues)
  • Reviewers will have sufficient industry knowledge (for the engagements reviewed)

Action to be Taken

If your firm doesn’t already have written review guidelines, consider developing those. Much confusion can be avoided by having a protocol–that way, everyone knows the drill.

If you do have written review guidelines, consider reviewing them for improvement.

Is a Continuance Decision Necessary for Attest Engagements?

Why continuance decisions matter

Most accounting firms do a fine job of thinking about and documenting the initial client acceptance. But after the first year, the continuance decision and related documentation are sometimes forgotten or ignored. Why?

Continuance decision

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Continuance Decision

The CPA may think the continuance decision is one those “management by exception” things–only to be thought about when apparent issues arise.

However, independence threats sometimes arise subtly. For example, what if a partners’ spouse invests in an audit client? Or maybe a staff member becomes a board member of a nonprofit audit client and he doesn’t tell anyone.

Also, problems can also arise on the client-side. Have they paid last year’s audit fees? Has the client engaged in any unethical activities? Some actions may cause you to question their integrity.

The time to discover changing engagement dynamics is before the engagement letter is signed. We certainly don’t want to near the end of an audit and realize we are not independent.

Need another reason to document the continuance decision? Think about peer review.

Peer Review

AICPA peer review checklists focus on independence documentation–whether an acceptance or continuance decision is made. So, if for no other reason, we need to consider and document the continuance decision to be safe in peer review.

Nonattest Services

While you are documenting continuance, summarize the nonattest services being performed and the client personnel that will oversee and assume responsibility for those services. Potential independence issues can arise from changes in client personnel. If a key accounting person leaves the employ of your attest client, is there a replacement with sufficient skill, knowledge, and experience to assume responsibility for the financial statements (if you create them)?

Check Your Files

Now would be a good time to sample a few of your files to see if they contain requisite acceptance or continuance documentation. Such documentation is necessary for the following types of engagements:

  • Audits
  • Reviews
  • Compilations (when the report is not disclosing a lack of independence)
  • Attestation engagements including agreed-upon-procedures

Are You All In or Not In at All?

Why some accountants experience genuine joy (even at work)

In the 1970s, I worked as a 4-H camp counselor. The kids who visited us were 10 to 14 years of age. My fellow counselors and I had a saying: “Love the Little People” and this we did with all our hearts. We were “all in.” (That’s me in the blue below–you can go ahead and laugh.)

Rock Eagle Counselors

Rock Eagle Camp Counselors 1978

Each week, the yellow buses would roll in and a new adventure would start. A fresh batch of little ones to pour our lives into. And we’d begin again–yelling, running, jumping, swinging, playing, swimming, crafting, laughing. We knew one thing: Love the Little People.

By Friday morning, the end of that group’s camping experience, the kids asked for autographs, gave hugs, and, yes, even cried (and we did to).

Why was this so rewarding? I think the secret lies in what Jesus said, “To find your life, you must lose it.” It’s is in giving and caring about others that real joy is found.

What did I learn from my four summers of serving others at Rock Eagle 4-H Center and Camp Wahsega?

To be fully engaged, we must be all in. We must know our mission. We must believe in the mission. We must pursue it—fully. In so doing, we become immersed. We experience what Mihaly Csikszentmihalyi calls flow. Time flies. We almost forget we exist. There is effort–sometimes great effort–but there is joy.

Why (Some) Accountants Don’t Have Joy

For most working men and women (including CPAs), life has lost its zip. We get up on Mondays because we have to. We work all week to pay the bills. And when Friday comes, we are thankful. We are not “all in.”

Can our work life be different? Yes.

No–on Friday morning–I don’t think anyone will ask for my autograph, hug me, or cry–except possibly for the joy of not seeing me a couple of days. But can we work in a way where flow happens? I think so.


Traditional Services

Find your passion, your mission. What is it that elevates your pulse, that causes excitement? This passion may be, for some, the performance of traditional services. I do know CPAs that love tax planning or performing audits. Is there a niche within those areas that “floats your boat”? Maybe your thing is nonprofit audits. For you tax guys and gals, is there a specialization that gets your juices going?

Why not develop your skills and knowledge in those areas? It may take time, money and effort. But if that special place causes you to come alive, pursue it. I find far too many CPAs meander, almost by accident, into their worklife.

Why? We don’t reflect. We don’t plan. We respond. This passive approach will land us and keep us in the land of existing rather than thriving.

If you’ve grown bored with traditional services, maybe it’s time for a change.

Non-traditional Services

Others find their joy in new adventures, something not in the traditional realm. Are you into big data? You love extracting meaning from reams of numbers. You enjoy wrapping your arms around immense databases. Learning a package such as IDEA fires you up and makes you feel powerful. Then intentionally lean in that direction. Build a five-year plan to become one of the top big-data CPAs in the country.

Other non-traditional service ideas include:

  • Software training
  • SOC reporting
  • Internal control design
  • Forensic services
  • Writing accounting books
  • IT consulting
  • Project management
  • Risk management

What’s Your Mission?

So, whether your passion lies in traditional or non-traditional services, I go back to mission. What are your goals? Who do you want to become? How can you get there? In finding answers to these questions, you’ll discover that which speeds your pulse. Joy is found in the pursuit of your goals and in the use of skills learned to serve others. 

Take Time to Reflect

Consider taking a day off to just think about where you are and where you want to go. Staying perpetually busy will not allow you to “think about your thinking.” So find a quiet place where you won’t be interrupted and think. Write down your goals and then once a month review them to see if you are still on track.

Before taking time off, you may want to read Michael Hyatt’s book Living Forward. You’ll find insights into planning your life and staying on track–that way, you can be “all in.”