Illustration of a Response by a Reviewed Firm to a Letter of Comments on an Engagement Review

The purpose of a letter of response is to describe the actions the firm has taken or will take including the timing of the planned actions to prevent a recurrence of each matter discussed in the letter of comments. If the reviewed firm disagrees with one or more of the findings or recommendations in the letter of comments, the reviewed firm should contact the administering entity for assistance in the matter. If the firm still disagrees after contacting the administering entity, the firm's response should describe the reasons for such disagreement. For additional guidance on disagreements, see paragraph 107 of the Standards. The letter of response should be carefully prepared because of the important bearing it may have on the decisions reached in connection with acceptance of the report on the review. (see paragraphs 111 to 120 "Acceptance of System, Engagement and Report Review.") The letter of response should be submitted to the reviewer for review and comment prior to submitting the response to the state CPA society administering the review. Sample Letter of Response to an Unmodified Report With a Letter of Comments Sample Letter of Response to a Modified Report With a Letter of Comments Sample Letter of Response to an Adverse Report Sample Letter of Response to an Unmodified Report With a Letter of Comments | Top September 15, 20XX VSCPA Peer Review Committee Virginia Society of CPAs P.O. Box 4620 Glen Allen, VA 23058-4620 Ladies and Gentlemen: This letter represents our* response to the letter of comments on the engagement review of our firm's accounting practice for the year ended June 30, 20XX. To prevent the recurrence of the disclosure deficiencies noted by the reviewer and to prevent other disclosure deficiencies from occurring, we have obtained copies of a comprehensive reporting and disclosure checklist. These checklists will be completed on all review engagements and on all compilation engagements. To prevent the incorrect titles being used on our reports and the computer-generated compiled financial statements prepared on a basis of accounting other than generally accepted accounting principles reflect the appropriate titles, we have established a manager review of all reports and financial statements prior to issuance. We will review professional standards governing the information to be included in engagement letters for financial statements prepared under SSARS No. 8. We believe these actions are responsive to the findings of the review. Sincerely, [Name of Firm] Sample Letter of Response to a Modified Report With a Letter of Comments | Top September 15, 20XX VSCPA Peer Review Committee Virginia Society of CPAs P.O. Box 4620 Glen Allen, VA 23058-4620 Ladies and Gentlemen: This letter represents our* response to the letter of comments on the engagement review of our firm's accounting practice for the year ended June 30, 20XX. Matters that resulted in a modified report As recommended by the reviewer, the entire staff has participated in continuing professional education related to reporting and disclosures. We will be performing a preissuance review by a partner not associated with the engagement to make sure that the accountant's report is appropriately modified when the financial statements depart from professional standards. Management representation letters will be obtained for all future review engagements issued by the firm. The firm has required that a manager review each engagement to ensure that the management representation letter is obtained and that all the required documentation is included in the working papers. The firm reviewed professional standards regarding reporting on comparative financial statements and going concern issues and will have a manager review these items on all future reports and financial statements and reports. Matters that did not result in a modified report We will put into practice a reporting and disclosure checklist for all engagements to be completed by staff. The checklist will be reviewed by the partner in charge of the engagement. The reporting and disclosure checklist will cover presentation of statement of activities issued by this firm and will be updated as new pronouncements are issued to ensure all disclosures are included in the financial statements. The firm has obtained the appropriate state board of accountancy license to perform engagements and issue reports. We believe these actions address the deficiencies and comments noted by the reviewer. Sincerely, [Name of firm] Sample Letter of Response to an Adverse Report | Top September 15, 20XX VSCPA Peer Review Committee Virginia Society of CPAs P.O. Box 4620 Glen Allen, VA 23058-4620 Ladies and Gentlemen: This letter represents our* response to the letter of comments on the engagement review of our firm's accounting practice for the year ended June 30, 20XX. To prevent the recurrence of the deficiencies noted by the reviewer and to prevent other such deficiencies from occurring, we will review the professional standards related to the deficiencies and ensure that the professional standards will be complied with on all future engagements. Specifically, we have implemented a partner review to ensure that all management representation letters are obtained for all review engagements issued by the firm. All professional staff who work on accounting engagements will be participating in continuing professional education in disclosures and reporting to correct the disclosure and reporting deficiencies noted by the reviewer. In addition, we have started using a third-party reporting and disclosure checklist to ensure all reporting and disclosure matters are properly addressed. We are now using a third-party checklist for all SSARS No. 8 engagements to ensure that all requirements of professional standards are adhered to. We believe these actions address the deficiencies and comments noted by the reviewer. Sincerely, [Name of firm] *The response should use the singular I, me, and my only when the reviewed firm is a sole practitioner.