Engagement Review

An engagement review consists of reading the accountant's compilation or review report and the related historical or prospective financial statements submitted by the firm. One of the objectives of an engagement review is to provide the reviewer with a reasonable basis for expressing limited assurance that the compilation and review engagements submitted conform in all material respects with the requirements of professional standards. Another objective of an engagement review is to find whether the firm's working paper documentation conforms with the requirements of SSARS and the SSAEs in all material respects. There is no opinion of the firm's system of quality control, only an opinion on the firm's conformity with SSARS and the SSAEs. An engagement review is available only to firms that are not required to have a system review and not eligible to have a report review.

The reviewer will request a summary of the number of the firm's review and/or compilation clients and the nature of the highest level of service provided to those clients. This should be classified into major industry categories for each proprietor, partner or shareholder of the firm who is responsible for issuing review or compilation reports.

At least two engagements will be selected for review. The firm must submit one engagement from each area of their accounting and review services: review, compilations with disclosures and compilations that omit substantially all disclosures. The selection should include one engagement for each partner of the firm responsible for issuing compilation and/or review reports.

The reviewer will select the financial statements and accountant's report for review. The firm should send this information to the reviewer within 30 days of the request, masking the client identity to maintain confidentiality. The firm should submit the most recently issued financial statements for the selected engagements.

The reviewer will read the financial statements submitted by the reviewed firm along with the accountant's review or compilation report, the background information and representations provided by the reviewed firm. The reviewer may have questions about the selected engagements while reviewing them. It is the firm's responsibility to respond promptly to all questions raised during the review whether those questions are raised orally or in writing on the "Matters for Further Consideration" form.The reviewer will contact the firm before issuing the report to resolve any questions raised during the review.

The reviewer will provide the firm with a copy of the report and letter of comments, if any, within 30 days of the date of the exit conference. If a letter of comments was issued, the firm should prepare a letter of response to those comments and submit a copy of the report, letter of comments and letter of response to the VSCPA within 30 days of the date of report issuance or by the due date, whichever is earlier. Prior to submitting the letter of response to the VSCPA, the firm should submit its response to the reviewer for review and comment. If no letter of comments was issued, the firm should submit a copy of the report to the VSCPA within 30 days of the date of report issuance or by the review due date, whichever is earlier.

Once all documentation is received by the VSCPA, it will undergo administrative and technical review before it is presented to the VSCPA Peer Review Committee. The Committee will accept the review, accept the review if the firm performs follow-up actions or defer the review until their next meeting in order to resolve any outstanding questions. The firm will receive a letter explaining the action the Committee takes on the review within 10 working days of the meeting. Once the Committee accepts the review, it is considered complete and an acceptance letter will be issued. At this time, the firm may wish to publicize the results of its review to clients. Firms should remember that the results of a peer review should not be published until accepted by the VSCPA Peer Review Committee.