Quality control: SSTS No. 9 provides guidance on tax quality control systems.

• Author: Davis, Conrad
• Position: Corporatetax

CPAs recognize the importance of quality control. Our clients expect that we apply our skills with care and thoroughness. Beyond our knowledge, we are hired for the quality of service we provide.

In one form or another, CPA firms maintain a system of quality control. And if recent events are any indication, it appears that the public and lawmakers also are focusing greater attention on the CPA's quality control system.

SSTS No. 9--Quality Control

The AICPA's exposure draft of proposed Statements on Standards for Tax Services No. 9--Quality Control (Dec. 30, 2005) provides guidance to AICPA members on implementing the original eight standards, which describe members' responsibilities to clients, the public and the tax system.

In addition, SSTS No. 9 will help CPAs comply with recent additions to Circular 230 that emphasize the need for guidance in responding to tax law changes and the public's expectations of CPAs.

These Circular 230 changes have increased the penalties and regulations imposed on CPAs.

While this is an AICPA standard, all CPAs should expect that it may be applied to them. In the absence of other applicable standards, the public and legal community may look to these standards to evaluate one's compliance with, and exercise of, due care.

For example, Circular 230 secs. 10.33 and 10.36 refer to best practices and compliance procedures. It is likely that this quality control standard will be considered during the enforcement of those sections.

Quality Control, Big and Small

Quality control is a key characteristic for all CPA firms. In the smallest offices, CPAs are using some system, such as checklists, workpapers, files or other procedures to document their quality control system. In the largest offices, there are detailed policies and procedures documenting the system of quality control.

SSTS No. 9 recognizes these diverse business and personnel situations wherein CPAs will apply this guidance. A goal of SSTS No. 9 is to provide sufficient ethical guidance, along with flexibility, to address a wide range of applications.

Five Elements of Quality Control

SSTS No. 9 requires the CPA to have a system of quality control and describes an adequate system of quality control as: "a process to provide the member with reasonable assurance that the firm (public practice) or employer's (nonpublic practice) personnel comply with applicable professional standards."

The standard states that any system of quality control should have policies...