Have you noticed lately what is in your audit, review and compilation forms, checklists and programs? I looked closely at a set purchased from a major publisher this week and I know the answer. They are like my elderly mother's purse. They contain everything but the kitchen sink!
For a review engagement, I counted the number of pages of forms, check lists and work programs. There were 20 pages of detailed questions and sign offs in the procedural documents alonge, and this didn't include the client acceptance and information forms! I looked closely at the contents and my guess is that less than half are applicable to smaller clients! My clients have always been small. I learned how to read their trial balances, ask questions, propose adjustments and draft financial statements a long time ago. Most participants in my staff training programs have too! Why have we become a forms-dependent profession? You may not like my answer.
Here it is. The accounting and auditing standards have become so complex and change so often that many CPA firm leaders don't have the time to keep up with the changes. When we can't stay abreast of the new stuff, our salvation becomes our practice aids. Do everything in hopes we don't miss the big thing! When leaders don't know what the standards require, they can't teach staff personnel. Staff personnel become forms dependent. I said you probably wouldn't like my answer!
Along came new audit standards a couple of years ago and another total revision is on the way from the Auditing Standards Board. Now, new compilation and review requirements from SSARS No. 19! More questions and forms. Where will it end?
It will end when we end it! None of the accounting and auditing standards, none of the quality control standards and none of the peer review standards say we have to use voluminous practice aids in a purchased system that don't fit our clients! Our documentation must contain sufficient evidence for an experienced reviewer to determine if we've satisfied the applicable standards. All I need is a copy of the professional standards or even a system of purchased practice aids just to use for reference. The standards don't require us to complete forms and checklists that don't fit the needs of our engagements!
How do we break the forms habit? It's simple but it requires a little time. We learn what the standards require and teach it to other firm personnel. Any of us can read SSARS 19 two or three times and become experts--it's really not that hard! We document some basic engagement performance policies and procedures in our qualtiy control document and share them with staff personnel over lunch. We formalize some simple work programs for our small engagements and use them for guidance. We eliminate about 25% of the wasted time on our small engagements!
For small compilation and review engagments, for example, I've eliminated about half of the pages in practice aids purchased from a major publisher and replaced them with simple documentation that will enable us to comply with professional standards and save a bunch of time. If you'd like a copy of my Small Compilation Engagements Reference Tool as an example, contact me on my website (www.cpafirmsupport.com) and I'll email it to you.
My headline question was, "What's in Your Practice Aids?" The answer is, WAY TOO MUCH!