[Pat]

Hi guys,

I am not sure if this is a good place to ask but it’s the only source I have. Hope you guys could help me.

I am just getting a CPA license but I am pretty confused with what kind of job I can do as a CPA.

On the approval letter, it is stated that “If you choose to issue reports on financial statements in your practice of public accountancy, you will have to undergo a Quality Review of your report work product per 252 CMR 2.15 as a condition for renewal of your individual license.”

1) What does issuing reports on financial statements mean? Does it mean auditing? or preparation of financial statements?

2) What kind of works are in the scope of “your practice of public accountancy”?

3) What is quality review? (I’ve been reading the rules 252 CMR but found it was so complicated and still have no idea what is it)

I am currently working in a private company and plan to get more income by providing bookkeeping and tax preparation services to small business. Does anyone know whether I have to go under quality review? or any office I can ask these kind of questions?

Thanks in advance

[Recked]

1) What does issuing reports on financial statements mean? Does it mean auditing? or preparation of financial statements?
Depends on your state. NYS has a similar requirement. The way I read the law is if you do any attest work you need to have peer review.
If you prepare financials in the course of bookkeeping work, or in the course of write-up to prepare tax returns, this does not fall under the issuing reports on FS.
If you do prepare financials in this manner I would be sure to include the words UNAUDITED: FOR INTERNAL USE ONLY, on the bottom of every page. Just to protect your own ass.
To directly answer your question. Issuing reports on financial statements means just that. You issue a report giving your opinion on the FS.

2) What kind of works are in the scope of “your practice of public accountancy”?
The most recent peer review letter I have from NYS specifically mentions the following 4 engagements.
Audits, Attestation Engagements, Reviews, Agreed Upon Procedures. If you do any of those 4 you need peer review.
My firm does FS prep/write up to prepare tax returns only. The highest level of FS prep we do is a compilation.
We do no audit/attest work.

3) What is quality review? (I've been reading the rules 252 CMR but found it was so complicated and still have no idea what is it)
Quality Review, also known as peer review is when you send samples or your work to an individual or firm that does peer review.
They compare your work and work papers, engagement letters, etc to the quality and standards that are expected and required according to the most recently released standards.
If you fail, they let you know, if you need improvement in areas they let you know. If you meet the minimum required, then you pass.
I have never done a peer review, but I have talked to people who have. Overall it doesn't seem like too big of a deal for a smaller firm.
It's expensive though. It sounds like it would be a nightmare for a larger firm, depending on how many samples they need to see.

[Pat]

@ReckedRacing

Thank you very much for your reply. They are very helpful and give me the pictures of what I was curious about. Really appreciate your generous help 🙂

[Recked]

Anytime.
Don't forget your liability insurance (and cyber data theft protection on the policy as well).

[Pat]

@reckedracing

Sure, I will do. Just know about this insurance. Thanks so much!

[Author]

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