The Future of Practice-Monitoring Programs
At the American Institute of CPAs private companies practice section (PCPS) conference held last May in San Diego, Thomas P. Kelley, CPA, AICPA group vice-president - professional, called for the combination of the PCPS peer review program and the quality review program by late 1994 and for the combination of the management of an accounting practice (MAP) and the private companies practice (PCP) executive committees in the same time frame. Key sections of Mr. Kelley's speech appear below. A UNIFORM PRACTICE-MONITORING PROGRAM The special committee on governance and structure - also known as the Larson committee - recommended that the PCPS and quality review programs ultimately be combined. These are some of the reasons for supporting that position: 1. There now are three different practice-monitoring programs: PCPS's, SECPS's and quality review's. It is difficult to convince people outside the profession we need three programs and that there are no major disparities among them. It's a shame that after we invested so much time and money in these programs, the fact that there are three of them casts a shadow on their effectiveness. 2. State societies have made a major investment in the administration of the quality review program and can probably absorb the work associated with the administration of PCPS peer reviews with little additional effort. At the same time, the AICPA's costs for committee support will go down substantially, while states will be able to spread their administrative costs over more firms. Everyone is in favor of cost control and operating efficiency until his or her favorite activities come under the knife. But the Institute has no special endowment fund to get us through tough times. Like everyone else, we must continually seek ways to improve operating efficiencies to control and reduce the overall cost of AICPA membership. 3. PCPS already is heavily involved in the quality review program. Fully 46% of the members of the quality review committees of the state societies that administer quality reviews come from PCPS member firms; the firms of another 28% are members of both PCPS and SECPS. There are arguments against a combination of the PCPS peer review program and the profession-wide quality review program. The most significant, in my opinion, is that the quality review program is still new, while PCPS peer reviews have a track record that goes back 15 years. That argument is no longer persuasive. The results of quality reviews, administered by committees heavily weighted with people experienced in the review process, are comparable to PCPS reviews. Within the next 12 months, all firms that need a review should have had one and many will have gone through a second. PCPS pioneered reviews for smaller firms and showed the program could work to the advantage of both the public and the profession. The quality review program has become the mass marketer of that proven product. A somewhat related objection is that PCPS standards are more stringent than quality review standards. The fact is that great strides have been made in bringing the two programs together. The program guidelines and checklists are the same. The standards are written differently but say essentially the same thing. Indeed, the only major difference is the PCPS requirement for a public file. That is an important matter but it can continue to be mandated by PCPS membership requirements, just as PCPS membership involves tough continuing professional education requirements for people who aren't yet CPAs. A third objection is that combining the PCPS and quality review programs will split the division for CPA firms and break the tie between the two sections. The reality is that the PCPS peer review program now has far more in common with the quality review program than it does with SECPS. SECPS is a self-regulatory organization and its membership requirements reflect that. …