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The AICPA Audit Committee Toolkit: Public Companies, 3rd Edition

Publisher: AICPA
  • $25.00-$31.25
    The AICPA Audit Committee Toolkit: Public Companies, 3rd Edition In Stock Product #: PMA1402P
    AICPA Member: $25.00
    Non-Member: $31.25
  • $25.00-$31.25
    The AICPA Audit Committee Toolkit: Public Companies, 3rd Edition Online Access Product #: PMA1402D
    AICPA Member: $25.00
    Non-Member: $31.25

The 2014 edition of this popular product will help audit committees of public companies achieve best practices for managing and incorporating their role in the organization.

Now with downloadable MS Word tools and checklists, this Toolkit offers a broad sampling of matrices, reports, questionnaires and other pertinent materials specifically tailored to public companies, and designed to make audit committee best practices actionable.

The toolkit, and accompanying download, will take the guesswork out of effectively establishing and managing an audit committee by furnishing you with dozens of useful tools and the most common forms for effective audit committee operation. The editable forms and checklists will help you efficiently create, file, and track your documentation.

New to this edition of the toolkit:

  • Updated with new COSO Framework (May 2013)
  • Improved forms and checklists are more user-friendly
  • Updated with regulatory changes
  • IFRS guidance has been added

The AICPA Audit Committee Toolkit series is the cornerstone of the Audit Committee Effectiveness Center, located at www.aicpa.org/AudCommCtr.

Note: The accompanying Microsoft Word download files (forms, checklists, worksheets) will automatically be added to the cart, free of charge, upon selecting the paperback or on-demand version below.

Excerpt

Chapter 4: Sample Request for Proposal Letter for CPA Services and Qualifications (Public Company)

Overview: This tool contains sample language to request proposal letters from qualified CPA firms when a public company’s audit committee seeks a new service provider. As such, the sample letter may be subject to audit committee review or discussion. Because the requests for proposal (RFPs) may require significant time investments from both the organization, to prepare them, and the CPA firms, to respond fully, the organization may first want to send requests for qualifications to determine the most qualified firms from which to request RFPs.
[Company Letterhead]
[Current Date]
[Managing Partner]
[CPA Firm]
[Street Address]
[City, State, Zip]

Dear Sir or Madam:

Our company is accepting proposals from CPA firms to provide audit and tax services for our company in the future. We invite your firm to submit a proposal to us by         [Date]         for consideration. Note that the audit committee of the company’s board of directors (audit committee) is the decision-maker in the hiring of the company’s auditor in accordance with the Sarbanes-Oxley Act of 2002 (the Act). The company is acting at the direction of the Audit Committee in sending this Request for Proposal to you. A description of the company, the services needed, and other pertinent information follow.

Background of ABC Company

ABC Company is a publicly traded manufacturer of widgets listed on the NASDAQ. Annual revenues are between $450 and $500 million per year, and the company employs 350 people at various locations around the U.S. The company was founded in 1983, and had its IPO in 1997. It has been profitable for the last 12 years and enjoys steady growth. The company has a December 31 year-end, with the usual filing requirements for a publicly traded company.

Services to Be Performed

Your proposal is expected to cover the following services:

  1. Quarterly reviews, beginning with the quarter ended on         [Date]        , of internally prepared financial statements and the related 10-Q filings
  2. Annual audit and related 10-K filing, to be completed in accordance with the requirements of the NASDAQ
  3. Tax filings for the company and three wholly-owned subsidiaries
  4. Auditor evaluation of and reporting on the internal control over financial reporting
  5. Attendance and reporting to the Audit Committee twice each year

Please note that your firm will not be engaged to perform any additional services prohibited by the Act, the Public Company Accounting Oversight Board (PCAOB), the Securities and Exchange Commission (SEC), or any other regulator as additional rules may be issued continually. In addition, if you wish to propose on any other services to our firm that are not prohibited by the Act, the PCAOB, or any other regulator, those services must be pre-approved by the Audit Committee, including tax services.

Key Personnel

Following is a list of key persons you may wish to contact with respect to this engagement:

Mr. Green CEO 1-123/555-7890
Ms. Brown CFO 1-123/555-7891
Mr. Black General Counsel 1-123/555-7892
Mr. White Controller 1-123/555-7893
Mr. Plain Chairman 1-123/555-4567
Ms. Trane Audit Comm. Chair 1-456/555-0123
Mr. Carr Outside Counsel 1-789/555-9870

For control purposes, we ask that you coordinate requests for additional information, visits to our site, review of prior financial statements and tax returns, and/or appointments with the CEO, CFO, and Audit Committee Chair through our controller, Mr. White.

Relationship With Prior CPA Service Provider

Because the company was founded over 20 years ago, these services have been provided by XYZ CPAs. However, that firm is no longer able to provide the services to our company. In preparing your proposal, be advised that management will give you permission to contact the prior auditors.

You may use this section to disclose whether the decision to change auditors is a function of changes in your organization, changes in the audit firm, or result of a period review of your satisfaction with the services provided. You may describe other aspects of your relationship with the prior auditor that you are willing to disclose at this stage in the proposal process here. CPA firms may request additional information, which you may choose to disclose only if the CPA firm signs a nondisclosure agreement.

Other Information

Use this space to discuss other information that a CPA firm may need to make an informed proposal on the accounting and/or auditing work that you require. As mentioned earlier, you should only disclose information here that you are comfortable disclosing; additional information may be available to the CPA firms interested in making serious proposals only after signing a nondisclosure agreement.

Your Response to This Request for Proposal

In responding to this request, please provide the following information:

These are sample questions that you may consider asking. You should tailor these questions to your circumstances, and delete or add additional questions as appropriate.

Background on the Firm:

  1. Detail your firm’s experience in providing auditing and tax services to companies in the manufacturing sector, as well as companies of a comparable size to ABC Company.
  2. Discuss your firm’s quality control policies and procedures with respect to nonattest services provided to publicly traded entities for whom you provide attest services. In cases in which the firm provides both audit and nonaudit services: How does your firm make a determination of its ability to perform nonaudit services and remain independent to provide audit services?
  3. Discuss commitments you will make to staff continuity, including your staff turnover experience in the last three years.
  4. Identify the five largest clients your firm (or office) has lost in the past three years and the reasons. Also, discuss instances when loss of the client was due to an unresolved auditing or accounting matter. Explain your strategies to resolve the issue(s).
  5. Describe how your firm will approach the audit of the organization, including the use of any association or affiliate member firm personnel and the areas that will receive primary emphasis. Also, discuss the firm’s use of technology in the audit. Finally, discuss the communication process used by the firm to discuss issues with the management and audit committees of the board.
  6. Furnish current standard billing rates for classes of professional personnel for each of the last three years.
  7. Describe how you bill for questions on technical matters that may arise throughout the year.
  8. Provide the names and contact information of other similarly sized clients of the partner and manager that will be assigned to our company.
  9. Describe how and why your firm is different from other firms being considered, and why our selection of your firm as our independent auditors is the best decision we could make.
  10. Describe how important ABC Company would be to your firm.
  11. Include a copy of your firm’s most recent Peer Review report, PCAOB report, the related letters of comments, and the firm’s response to the letters of comments.
  12. Describe the firm’s approach to the resolution of technical disagreements (a) among engagement personnel, and (b) between the firm and the client.
  13. Indicate how the firm intends to comply with the requirements of the Act, any rules of the PCAOB, including the implementation of AS-5 and the requirement for audit partner rotation.

Experience in Our Industry

Use this space to ask questions about the firm’s experience providing services to other companies in your industry, as well as providing services to companies within your value chain—either as suppliers or customers.

Relationship and Experience With Regulators:

  1. Detail your firm’s experience in providing audit and related services to clients that are publicly traded.
  2. Detail any investigation by the SEC, the PCAOB, or other regulatory agencies in which either you or the client are the target, with respect to your publicly traded clients.
  3. Detail any civil or criminal litigation matter involving the firm but not necessarily the client.
  4. Detail any positions taken by your firm with respect to accounting and auditing matters, with either the SEC, PCAOB, Financial Accounting Standards Board, AICPA, Federal Trade Commission, and/or others that could be viewed as controversial and are related to our business.

Expected Approach to This Audit

  1. Identify the partner, manager, and in-charge accountant who will be assigned to this audit if you are successful in your bid, and provide biographical material for each. Indicate any complaints against them that have been leveled by the state board of accountancy or other regulatory authority, if any. Indicate any corrective actions that have been taken by the firm with respect to these people.
  2. Describe how your firm will approach the audit of the company, including the use of any association or affiliate member firm personnel.
  3. Set forth your fee proposal for the 20XX audit with whatever guarantees you offer regarding fee increases in future years. Provide your proposed fee for the quarterly review work that will be required as well as the corporate tax preparation if you are proposing to perform the tax work. Ensure that the fee as proposed is sufficient to cover the work that you expect to perform if you are awarded this audit.

Evaluation of Proposals

The Audit Committee of the Board of Directors of ABC Company will evaluate proposals on a qualitative basis. This includes a review of the firm’s peer review and PCAOB reports and related materials, interviews with senior engagement personnel to be assigned to our company, results of discussions with other clients, and the firm’s completeness and timeliness in its response to us. Finally, please submit information on the firm’s liability insurance coverage.

If you choose to respond to this request, please do so by [Date indicated earlier in the letter].

Sincerely,

Ms. Brown, CPA
Chief Financial Officer
Ms. Trane
Chair
Audit Committee

About the Publisher

AICPA

About the AICPA The American Institute of CPAs is the world’s largest member association representing the accounting profession, with more than 412,000 members in 144 countries, and a history of serving the public interest since 1887. AICPA members represent many areas of practice, including business and industry, public practice, government, education and consulting. The AICPA sets ethical standards for the profession and U.S. auditing standards for private companies, nonprofit organizations, federal, state and local governments. It develops and grades the Uniform CPA Examination, and offers specialty credentials for CPAs who concentrate on personal financial planning; forensic accounting; business valuation; and information management and technology assurance. Through a joint venture with the Chartered Institute of Management Accountants, it has established the Chartered Global Management Accountant designation, which sets a new standard for global recognition of management accounting.