PRACTICE- MONITORING PROGRAM
PRACTICE- MONITORING PROGRAM
Practice –
Montoring Program :
To achieve the effectiveness of issued
professional standards, a suitable means to verify compliance with these
standards should be established. Therefore the Certified Public Accountants’
Regulation entrusted, SOCPA to develop an appropriate quality review program,
and form an adequate adminstrative organization to adminster the program.
1. Quality the Review
Committee :
The quality review committee was established by Board Resolution No.
dated 29.04.1413H correspondent 26.08.1992 in order to ensure that certified
public accountants’ comply with CPA’s Regulations and its bylaws, accounting and
auditing standards and other professional standards. This committee has the
authority to achieve its objectives and particularly entrusted to carry out the
following :
A.
Develop a practice-monitoring program.
B.
Supervise implementation of the program.
C.
Coordination with other
professional parties to develop training courses related to practice- monitoring
program.
D.
Hiring consultancy services to
develop and implement the practice- monitoring program.
The following summarizes efforts made to develop an
effective practice- monitoring program :
1.
Quality control standards
for CPA firms :
The quality review committee conducted a comprehensive study for
preparing quality control standards for CPA firms. The Board issued resolution
No. 3/3 dated 26.01.1415H corresponding to 05.07.1994, approving the quality
control standards for CPA firms, as guidelines for two years. Three months
before the end of guidelines period the committee request concerned parties,
including CPA firms, university staff members, public companies, Chambers of
commerce and independent governmental organizations, to provide SOCPA with their
comments on the quality control standards. Received comments were studied and
presented to the quality review committee. The committee, upon adequate study,
approved the proposed quality control standards and submitted it to the Board
for final approval. The Board issued its resolution No. 8/2 dated 08.09.1418
corresponding to 06.01.1998 approving the quality control standards.
These standards consist of two sections, the first
one includes, definition, aim, and scope of quality control. Section two
includes, objectives of quality control standards, responsibility for compliance
with quality control standards, and the elements of quality control which are :
1.
Independence.
2.
Assigining personnel to
engagements.
3.
Consultation.
4.
Supervision.
5.
Hiring.
6.
Professional development.
7.
Advancement.
8.
Acceptance and continuance
of clients.
9.
Compliance with CPAs
Regulations and Rules.
10.
Periodic internal review
(Inspection).
This section includes also the key factors that
should be taken in consideration on the design or assessment of quality control
standards and when the CPA firm documents for quality control.
These standards are considered as the principal
base of the quality review program which will be adminstrated in order to obtain
reasonable assurance that CPAs comply with the provisions of the Certified
Public Accountants Regulations, audit and accounting standards, SOCPA
professional rules and standards, and other professional instructions issued by
competent authorities.
2.
Practice-
monitoring program :
The quality review committee made best efforts to
set a quality review program, taking in consideration that such program is to be
consistent with professional environment in the Kingdom, the gradual progress,
and improvement of professional performance. The proposed program was presented,
through memorandum No. 48/1 dated 18.08.1415H corresponding to 19.01.1995, to
SOCPA Board which in turn, issued its resolution No. 2/2 approving the
practice-monitoring program to be implemented immediately upon issuance.
The aim of this program is to ensure that CPAs
comply with the provisions of Certified Public Accountants Regulations,
accounting and auditing standards, professional rules issued by SOCPA, and other
professional instructions issued by competent authorities for the purpose of
improving professional practices of CPA firms, maintain continuous quality
professional practice and maximize, efficiency and reliability of professional
services. The practice- monitoring program consists of three sections as follow
:
Section (1) :
Includes definitions, an introduction
providing historical description to the stages and procedures followed in
preparing the program. It also includes a description of program objectives and
performance requirements.
Section
(2) :
Includes an explanation of the
objectives, types and guidelines for CPA firm quality control review, which
consists of annual review and periodic review. The program details annual review
guidelines. Periodic review guidelines were issued during 1999.
Section
(3) :
Indicates CPA Firm obligations, including
provision of periodic informations and data to SOCPA so as to have an initial
understanding of the extent to which CPA Firms comply with the adequate quality
control, accounting and auditing standards, and SOCPA rules and standards.
The review program requires CPA Firms to comply
with the following :
1.
Provide SOCPA with periodic data on CPA
Firms :
CPA Firm shall provide SOCPA, within a period not exceeding 90 days from
the end of firm fiscal year, with the informations that may enable program
administraters to implement the practice- monitoring program, monitor
practitioners performance, initially acquainted of the extent of practitioners
compliance with the regulations, accounting and auditing standards and SOCPA
professional rules and standards. Section (3) of the practice- monitoring
program includes detailed explanation of those requirements.
2.
Apply adequate quality control :
A practitioner, regardless of its size or regulatory form, shall apply
adequate quality control in compliance with quality control standards issued by
SOCPA.
3.
Review implementation :
Practioners shall accept that review team appointed by SOCPA is to perform
the review as follows :
3.1
Review annual periodic information provided by the firm
(annual review). Section (3) of the program includes an illustration of the data
the firm is required to submit periodically to SOCPA.
3.2
CPA firms quality control review (periodic review). This
review is to be conducted at minimum as follow :
3.2.1
Once every three years for firms auditing public
companies, banks and indepent governmental organizations.
3.2.2
Once every five years for firms auditing other companies
and establishments.
Article (2.2.3) of
practice- montoring program requires the quality review committee, upon Board
approval of quality control standards for CPA firms to establish quality control
review guidelines and submit it to Board for approval. A proposed guideline was
prepared which includes; review procedures to which the review team,
practitioner, and other parties responsible of the implementation of the review
program are required to comply when organizing or performing a periodic review.
The guidlines include also review scope, study and assessment of quality
control, selection of engagements to be reviewed, practitioners multi- offices
to be visited, form and content of review report. The proposed manual was sent
for comments to interested parties concerned with the accounting and auditing
profession including, practitioners, university staff members, public companies,
chambers of commerce and some independent governmental organizations. The
quality review committee studied received comments, and approved the revised
program which was submitted to SOCPA’s Board for final approval. The Board
issued resolution No. 4/3 dated 05.07.1419H corresponding to 25.10.1998
approving the practice- montoring guideline for CPA firms.
Review guidline does
not require new professional requirements. However, it includes the same
requirements stated in the Certified Public Accountants Regulations, accounting
and auditing standards, professional ethics rules, quality control standards and
other professional and regulatory requirements. Therefore the review manual
contains such procedures needed only to provide reasonable assurance that
practitioners comply with those requirements.
2.4
Quality control manual :
To facilitate application of quality control standards to practitioners,
SOCPA prepared a quality control manual that includes a description of the
professional and regulatory requirements for each of the elements of quality
control for practitioner, policies and procedures guidlines and illustrative
forms proposed for documentation of policies and procedures adopted by firm to
verify compliance with quality control standards. The quality review committee,
through its resolution No. 5/2 dated 28.02.1419H, approved the manual as
guidance reference to be followed by practitioners on implementation of quality
control standards.
