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The Complete CPA Reference by Joel G. Siegel, Jae K. Shim, Nick A. Dauber

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CHAPTER 16

Quality Control

In 1979, the Auditing Standards Board of the American Institute of Certified Public Accountants (AICPA) issued SAS 25, The Relationship of Generally Accepted Auditing Standards to Quality Control Standards. As indicated in the pronouncement, generally accepted auditing standards (GAAS) relate to the conduct of an audit, whereas quality controls relate to the conduct of the accounting firm's practice.

Subsequent to the issuance of SAS 25, the Auditing Standards Board began issuing a series of pronouncements titled Statements on Quality Control Standards (SQCS). Firms enrolled in the AICPA practice-monitoring program are required to comply with the provisions in these statements.

Recommendation
Firms not enrolled in the AICPA practice-monitoring program are encouraged to comply with the provisions in the SQCS.
Caution
SQCS do not specify guidance for quality control considerations of the Public Company Accounting Oversight Board, which regulates the audits of publicly traded entities (i.e., issuers).

What is a system of quality control?

A system of quality control is a process, consisting of policies and procedures, designed to provide reasonable, but not absolute, assurance that CPA firm personnel comply with professional standards and applicable legal and regulatory requirements.

A system of quality control should be established for a CPA firm that performs any of these services:

  • Auditing (governed by SASs)
  • Attest engagements (governed by SSAEs) ...

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