Extending the benefits from a voluntary tax practice review.

• Author: McMillin, Mary Ellen

Until recently, only national and regional firms, or local firms that were members of certain associations of firms, could benefit from the cross-review of their tax practices. These reviews, when available, would improve effectiveness and efficiency as well as reduce risk exposure.

Voluntary Tax Practice Review (VTPR) is designed to provide a framework for any firm desiring the benefits of these reviews. The goal of VTPR is "to give CPAS useful, practical ideas to improve their tax practice" (introduction to the AICPA Tax Division's Guidelines for Voluntary Tax Practice Review).

The Guidelines contains a six-page "Statement On Guidelines For Tax Practice Quality Control" that clearly lays out priorities for a quality tax practice; its discussion of the role of advocacy and integrity is particularly important.

A VTPR includes both administrative and technical reviews. The Guidelines provides a framework for both types of review. There is no question that self-review provides a major benefit. For a discussion of the benefits of using the Guidelines for Voluntary Tax Practice Review for self-assessment, see the item "Using VTPR for Self-assessment," in the March 1992 Tax Practice Management column, at 190.

Some firms may prefer to be self-reviewing for technical reviews and engage an outside firm for administrative review. This would be most appropriate for a firm that already has a quality control partner responsible for internal tax technical review. Administrative review is needed because procedures are so closely tied to overall quality control. The introduction to the Guidelines emphasizes the importance of the administrative review: Firms "are discouraged from having a technical review without an accompanying administrative review."

The outside reviewer

Using an outside firm to provide administrative and/or technical reviews provides:

A fresh perspective and challenge to the status quo.

A base of understanding that allows additional consulting at reasonable cost

Assurance that the reviews will be carded out.

A fresh perspective

Administrative procedures are closely linked to quality control, and firm management must increasingly rely on these procedures as the firm grows or as the office use of information technology increases.

However, practice procedures and policies within many firms are static unless the status quo is challenged. Sometimes new firm members will add a fresh, outside perspective based on their experience elsewhere.

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