A project team was set up involving both the Quality Review team and the Practitioner Certification Committee (now known as the Public Practice Committee). Various research was undertaken, including an independent review of the current visit process, benchmarking against other bodies, a review of the common investigations/complaints against members in practice, and a review of members feedback forms during the second cycle. ICAS also conducted a verbal member feedback exercise and a sample of firms were contacted for feedback on their thoughts on the quality review process. Firms not sampled were invited to volunteer feedback if they wished to.
Coincidentally, the Professional Oversight Board (the POB) launched a review of practice assurance schemes across the accountancy sector and this also provided ICAS with the opportunity of an independent review at the same time as the project was progressing.
Members' Feedback
The consistent feedback received was that:
- members found the Quality Review visit process educational and helpful;
- there was significant value added in being able to ask questions of someone independent from the practice and with significant practical knowledge of all sizes of practising units;
- members would like more free guidance available before the visit;
- members would like the "positives" highlighted more prominently and not just the main findings of the visit;
- some firms who had very few issues on their last visit commented that they would like to either be visited less often or in less depth, whilst wanting those firms with more issues on visits to be visited more often on a risk basis;
- having gone through two visit cycles, firms considered it is the right time to introduce follow up action post visit to ensure that action plans are implemented in a timely manner. But that this follow up action should be done in a constructive manner between the firm and the QR Reviewers;
- there should be less repetition in file selection, particularly on the larger firm visits, and that there should be more risk based file selection, including selection of more risky engagement types not previously reviewed in detail.
This feedback was consistent with the results from the feedback forms received during the second cycle.
Is Quality Review working?
As part of the review, it was considered whether the Quality Review function had met the objectives set, to date, of:
- upholding standards in the public interest;
- educating and assisting members.
The feedback received from members supported that the Quality Review function was meeting these objectives. In addition, an analysis of the visit findings and suggestions over the last two cycles was analysed, indicating that significant improvements have been made in a number of important areas. However it was also clear that the goalposts are constantly changing and that the work of Quality Review is by no means done, and that there are constantly new challenges and new developments facing practitioners. Quality Review therefore still has an important role to play in the future.
Third cycle approach
ICAS values the views of its members and the third cycle has been developed with the member's views in mind. The visit approach remains fundamentally the same but with a number of additional enhancements:
- a number of practice helpsheets have been devised and are available on the ICAS website free of charge;
- a more risk based approach will be used to visit selection, visit frequency, and the extent of fieldwork undertaken on Quality Review visits (firms with fewer issues in previous visits having a less intensive visit);
- a more risk based approach to file selection will be adopted;
- work will be extended in relation to a number of areas, including but not limited to: ethics, PII, client acceptance and disengagement; advertising/communications; firm financials; bank account reviews; complaint handling; and fee note reviews;
- a number of areas which were recently adopted will continue e.g. firm's involvement in the ICAS Group Consumer Credit Licence activities and a review of income reference work;
- a number of riskier type engagements will be looked at in more depth (e.g. corporate finance), whilst a number of new areas will be reviewed (e.g. internal audit, IT security, forensic accounting and litigation support, human resource consultancy/services);
- the positive findings of the visit will be more prominently highlighted in the visit report;
- firms with more significant findings (in number/nature) will require to submit evidence of follow up action post visit (e.g. if anti money laundering procedures were out of date, these may require to be submitted some time after the visit. Or if charity accounts were of a poor standard the Quality Review team may check charity accounts by that firm a period of time after the visit). This follow up action will be conducted on a supportive basis between the firm and the Quality Review team and would not usually involve any regulatory committee (save for serious cases of lack of progress);
- firms with poorer results will be visited more frequently;
- there will be changes to the process for the POB review of filed accounts. Each year ICAS Accounting & Auditing, at the POB's request, conducts a disclosure check on a sample of filed accounts and notifies firms affected of the outcome of the review by letter. Currently, this process is conducted independent of the QR function. Going forward, Accounting & Auditing will select their sample each year from the pool of firms who are to be "quality reviewed", the results will then be communicated by the Quality Review team on a face-to-face basis with the firm at the QR visit. This will allow the firm the ability to ask questions and seek advice of the Quality Review reviewer;
- the third cycle will be a six year cycle to coincide with the audit monitoring cycle and to allow sufficient time and resource for the team to monitor follow up action post visit;
- firms will be able to promote themselves on their advertising and letterheads as "this firm is Quality Reviewed by ICAS".
Conclusion
We trust the above update is self explanatory. ICAS has also revised the visit booklet "Your Quality Review Visit" to explain the third cycle process in more detail. If you have any further questions regarding the revised QR visit process please do not hesitate to contact the QR team on 0131 347 0284.