PRACTICE- MONITORING PROGRAM

Practice Monitoring Program :
To achieve the effectiveness of issued professional standards, a suitable means to verify compliance with these standards should be established. Therefore the Certified Public Accountants’ Regulation entrusted, SOCPA to develop an appropriate quality review program, and form an adequate administrative organization to administer the program.

1.The Quality Review Committee :

• A. Develop a practice-monitoring program.
• B. Supervise implementation of the program.
• C. Coordination with other professional parties to develop training courses related to practice- monitoring program.
• D. Hiring consultancy services to develop and implement the practice-monitoring program.

1.Quality control standards for CPA firms

The quality review committee conducted a comprehensive study for preparing quality control standards for CPA firms. The Board issued resolution No. 3/3 dated 26.01.1415H corresponding to 05.07.1994, approving the quality control standards for CPA firms, as guidelines for two years. Three months before the end of guidelines period the committee request concerned parties, including CPA firms, university staff members, public companies, Chambers of commerce and independent governmental organizations, to provide SOCPA with their comments on the quality control standards. Received comments were studied and presented to the quality review committee. The committee, upon adequate study, approved the proposed quality control standards and submitted it to the Board for final approval. The Board issued its resolution No. 8/2 dated 08.09.1418 corresponding to 06.01.1998 approving the quality control standards. These standards consist of two sections, the first one includes, definition, aim, and scope of quality control. Section two includes, objectives of quality control standards, responsibility for compliance with quality control standards, and the elements of quality control which are :

1. Independence.
2. Assigning personnel to engagements.
3. Consultation.
4. Supervision.
5. Hiring.
6. Professional development.
7. Advancement.
8. Acceptance and continuance of clients.
9. Compliance with CPAs Regulations and Rules.
10. Periodic internal review (Inspection).

This section includes also the key factors that should be taken in consideration on the design or assessment of quality control standards and when the CPA firm documents for quality control. These standards are considered as the principal base of the quality review program which will be administrated in order to obtain reasonable assurance that CPAs comply with the provisions of the Certified Public Accountants Regulations, audit and accounting standards, SOCPA professional rules and standards, and other professional instructions issued by competent authorities.

2.Practice- monitoring program :

The quality review committee made best efforts to set a quality review program, taking in consideration that such program is to be consistent with professional environment in the Kingdom, the gradual progress, and improvement of professional performance. The proposed program was presented, through memorandum No. 48/1 dated 18.08.1415H corresponding to 19.01.1995, to SOCPA Board which in turn, issued its resolution No. 2/2 approving the practice-monitoring program to be implemented immediately upon issuance.

The aim of this program is to ensure that CPAs comply with the provisions of Certified Public Accountants Regulations, accounting and auditing standards, professional rules issued by SOCPA, and other professional instructions issued by competent authorities for the purpose of improving professional practices of CPA firms, maintain continuous quality professional practice and maximize, efficiency and reliability of professional services. The practice- monitoring program consists of three sections as follow :

Section (1) :

Includes definitions, an introduction providing historical description to the stages and procedures followed in preparing the program. It also includes a description of program objectives and performance requirements.

Section (2) :

Includes an explanation of the objectives, types and guidelines for CPA firm quality control review, which consists of annual review and periodic review. The program details annual review guidelines. Periodic review guidelines were issued during 1999.

Section (3) :

Indicates CPA Firm obligations, including provision of periodic information and data to SOCPA so as to have an initial understanding of the extent to which CPA Firms comply with the adequate quality control, accounting and auditing standards, and SOCPA rules and standards.

• 1.Provide SOCPA with periodic data on CPA Firms :
  CPA Firm shall provide SOCPA, within a period not exceeding 90 days from the end of firm fiscal year, with the information that may enable program administrates to implement the practice- monitoring program, monitor practitioners performance, initially acquainted of the extent of practitioners compliance with the regulations, accounting and auditing standards and SOCPA professional rules and standards. Section (3) of the practice- monitoring program includes detailed explanation of those requirements.
• 2. Apply adequate quality control :
  A practitioner, regardless of its size or regulatory form, shall apply adequate quality control in compliance with quality control standards issued by SOCPA.
• 3. Review implementation :
  Practioners shall accept that review team appointed by SOCPA is to perform the review as follows :
• 3.1 Review annual periodic information provided by the firm (annual review). Section (3) of the program includes an illustration of the data the firm is required to submit periodically to SOCPA.
• 3.2 CPA firms quality control review (periodic review). This review is to be conducted at minimum as follow :
• 3.2.1 Once every three years for firms auditing public companies, banks and independent governmental organizations.
• 3.2.2 Once every five years for firms auditing other companies and establishments.
  Article (2.2.3) of practice- monitoring program requires the quality review committee, upon Board approval of quality control standards for CPA firms to establish quality control review guidelines and submit it to Board for approval. A proposed guideline was prepared which includes; review procedures to which the review team, practitioner, and other parties responsible of the implementation of the review program are required to comply when organizing or performing a periodic review. The guidelines include also review scope, study and assessment of quality control, selection of engagements to be reviewed, practitioners multi- offices to be visited, form and content of review report. The proposed manual was sent for comments to interested parties concerned with the accounting and auditing profession including, practitioners, university staff members, public companies, chambers of commerce and some independent governmental organizations. The quality review committee studied received comments, and approved the revised program which was submitted to SOCPA’s Board for final approval. The Board issued resolution No. 4/3 dated 05.07.1419H corresponding to 25.10.1998 approving the practice- monitoring guideline for CPA firms. Review guideline does not require new professional requirements. However, it includes the same requirements stated in the Certified Public Accountants Regulations, accounting and auditing standards, professional ethics rules, quality control standards and other professional and regulatory requirements. Therefore the review manual contains such procedures needed only to provide reasonable assurance that practitioners comply with those requirements.

2.4 Quality control manual :

To facilitate application of quality control standards to practitioners, SOCPA prepared a quality control manual that includes a description of the professional and regulatory requirements for each of the elements of quality control for practitioner, policies and procedures guidelines and illustrative forms proposed for documentation of policies and procedures adopted by firm to verify compliance with quality control standards. The quality review committee, through its resolution No. 5/2 dated 28.02.1419H, approved the manual as guidance reference to be followed by practitioners on implementation of quality control standards.