Interim Quality Control Standards
SEC Practice Section (SECPS) - Requirements of Membership
Section 1000.08(d) – Continuing Professional Education of Audit Firm Personnel
Ensure that all professionals in the firm residing in the United States, including CPAs and non-CPAs, participate in at least 20 hours of qualifying continuing professional education (CPE) every year and at least 120 hours every three years. Effective for CPE years beginning on or after January 1, 1995, professionals who devote at least 25% of their time to performing audit, review or other attest engagements (excluding compilations), or who have the partner/manager-level responsibility for the overall supervision or review of any such engagements, must obtain at least 40% (eight hours in any one year and 48 hours every three years) of their required CPE in subjects relating to accounting and auditing. The term accounting and auditing subjects should be broadly interpreted, and for example, include subjects relating to the business or economic environments of the entities to which the professional is assigned.1
Section 1000.08(f) – Concurring Partner Review of the Audit Report and the Financial Statements of Commission Registrants
Establish policies and procedures that meet the requirements set forth in Appendix E, SECPS §1000.39, for a concurring review by a partner other than the audit partner in charge of an SEC engagement before issuance of an audit report on the financial statements of an SEC engagement and before the reissuance of such an audit report where the performance of subsequent events procedures is required by professional standards.2
Section 1000.08(l) – Communication by Written Statement to all Professional Personnel of Firm Policies and Procedures on the Recommendation and Approval of Accounting Principles, Present and Potential Client Relationships, and the Types of Services Provided
Communicate through a written statement to all professional firm personnel the broad principles that influence the firm's quality control and operating policies and procedures on, as a minimum, matters related to the recommendation and approval of accounting principles, present and potential client relationships, and the types of services provided, and inform professional firm personnel periodically that compliance with those principles is mandatory.3 (Appendix H, SECPS §1000.42 is an illustration of such a statement.)
Section 1000.08(m) – Notification of the Commission of Resignations and Dismissals from Audit Engagements for Commission Registrants
When the member firm has been the auditor for an SEC registrant (as defined in Appendix D, SECPS §1000.38) and has resigned, declined to stand for re-election or been dismissed, report the fact that the client-auditor relationship has ceased directly in writing to the former SEC client, with a simultaneous copy to the Office of the Chief Accountant of the Securities and Exchange Commission.4 Such report shall be sent to the former SEC client and to the Office of the Chief Accountant by the end of the fifth business day following the member firm's determination that the client-auditor relationship has ended, irrespective of whether or not the registrant has reported the change in auditors in a timely filed Form 8-K.
Section 1000.08(n) – Audit Firm Obligations with Respect to the Policies and Procedures of Correspondent Firms and of Other Members of International Firms or International Associations of Firms
For SECPS member firms that are members of, correspondents with, or similarly associated with international firms or international associations of firms, seek adoption of policies and procedures by the international organization or individual foreign associated firms5 that are consistent with the objectives set forth in Appendix K, SECPS §1000.45 for SEC registrants.6
Section 1000.08(o) – Policies and Procedures to Comply with Independence Requirements
Ensure that the member firm has policies and procedures in place to comply with applicable independence requirements of the AICPA, SEC and Independence Standards Board.7
1 See SECPS §8000 for additional information about the continuing professional education requirement and the manner in which compliance is to be measured.
2 Effective for audits of financial statements of SEC clients for periods ending after the date the firm becomes a member and for reports that are reissued after that date.
3 Firms that become members of the Section shall prepare and issue such a statement within six months of joining the Section.
4 See Appendix I, SECPS §1000.43, for standard form of such report.
5 For this purpose, a foreign associated firm is a firm domiciled outside of the United States and its territories that is a member of, correspondent with, or similarly associated with an international association of firms with which the SECPS member is associated.
6 See Appendix D, SECPS §1000.38, "Revised Definition of an SEC Engagementt" for purposes of determining compliance with the membership requirements of SECPS §1000.08e, f, g, h, i, k, m, n, o, and p.
7 See Appendix L, SECPS §1000.46, "Independence Quality Controls" for purposes of determining compliance with the membership requirement.
Copyright © 2001, American Institute of Certified Public Accountants, Inc.
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