GUIDELINES FOR VOLUNTARY TAX PRACTICE REVIEW

Published by the AICPA

Reviewed by Steve Holub, Pender Newkirk & Company, chair of the AICPA Tax Practice Management Committee, which has oversight responsibility for the Voluntary Tax Practice Review Program

Late last year the AICPA released
a revised version of its Guidelines for Voluntary Tax Practice Review. The new version is considerably shorter than its predecessor and perhaps easier to use. This is the first substantial rewrite of the guidelines in almost eight years.

Use of the word "voluntary" in the title sparked considerable controversy. The task force working on the revision felt that although the program was voluntary, industry practice is making regular technical and quality review of all segments of the accounting practice the standard. Accordingly "voluntary" was, for the most part, removed from the text. However, practitioners should remember that the guidelines are in fact voluntary and not to be regarded as professional standards relating to the conduct of a tax practice.

It makes sense for a firm to institute procedures to ensure that its tax practice is providing quality services to clients. In today's litigious environment it is far better to identify situations where lapses in quality of practice have occurred and take steps to correct them before they can result in time consuming, and often demoralizing, claims and litigation. Review can be done by self-assessment or by an outside reviewer. Frequently firms use self-assessment the first time they review their practice and then, after making the indicated improvements and adjustments, bring in an outside reviewer to focus further on the most significant quality issues facing the practice.

Since the guidelines emphasize improving quality in the tax practice, successful completion of a tax practice review should place the firm in a far better position if claims arise. The results of the review are communicated directly to the management of the practice, and the reviewer retains no records relating to the review. No report of any kind is submitted to the AICPA or any other organization that may have oversight over the reviewed practice unless the practice manager specifically requests that it be done.

The manual itself consists of 11 sections that walk the reviewer through the process. Following the guidelines will virtually assure a thorough evaluation. The guidelines are drafted so that they can be used for review of any size tax practice, from a large firm with a structured tax department to a sole practitioner. Much of the material is presented as checklists, questionnaires, and other aids. The material is quite detailed and provides
specific guidelines on what to look at, when to ask for it, and who to interview.

In addition to the main sections, the manual has 10 appendices that provide sample quality control documents for different types of tax practices, a sample engagement letter, sample comment letters, and forms to summarize matters for further consideration, as well as other reminders and aids.

Anyone responsible for the conduct of a tax practice should consider doing a tax practice review. With Guidelines for Voluntary Tax Practice Review, this task will be easier and the final results more satisfactory. *

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