Selecting a Reviewer
The reviewing firm must be selected carefully to ensure that it meets all the requirements to be a qualified reviewer. Other considerations in selecting a reviewer are as follows:
Areas of Practice and Industry Experience. Reviewers must have current knowledge in the areas and industries in which the reviewed firm practices in order to be considered qualified to perform the review.
Geographic Location. Firms normally prefer to select reviewers from locations other than the reviewed firm's operating region. However, firms should keep in mind that travel costs in a system review are the responsibility of the reviewed firm and that they will increase significantly with distance.
Size and Nature. Firms may want reviewers to come from firms that are of similar size and nature as their firm so that they have the same perspective of their reviews because they can help them plan for growth, and they may have greater experience in those areas in which the firm practices.
Experience. Some reviewers have more experience in performing reviews and may be able to perform the review more efficiently and provide useful suggestions to the reviewed firm.
Cost. Although this is a very important consideration in determining the reviewing firm, it should be considered after weighing all of the above items of importance.
A firm that is a member of an authorized association of CPA firms may elect to have the association of CPA firms organize a review team to conduct its review. Members should contact their association for further information.
Estimating the Number of Hours Needed for System Reviews
The estimated number of hours for the review varies upon the total number of accounting and auditing hours the firm has and the nature of the firm's practice. When estimating the hours for monthly or quarterly compilations, firms should only include the time it actually took to prepare and review the financial statements. It should not include any "bookkeeping" time. Based on the experience of prior reviews, the following guidelines have been prepared:
Estimated Number of Accounting and Auditing
Number of Reviewers
1 - 1000
12 - 20