ACCEPTANCE AND CONTINUANCE

The firm’s inclusion of the acceptance and continuance procedures by the PSQC is lacking. The firm
should also include the standards relating to the firm’s capability on acceptance and continuance
procedures.

DAGDAG SA PROCEDURES

Although it is appropriate for the firm to annually assess the integrity of the client, the assessment
should only be once a year. I would recommend that the assessment is conducted regularly because the
extent of knowledge a firm will have regarding the integrity of a client will generally grow within the
context if an on-going relationship with the client. This will help the firm respond to the issues with
regards to the client on time.

Also, in the firm’s procedures, the firm should not only assess the circumstances of the client. It should
assess the firm’s capability, competence, time, and resources. Whether or not, the firm is capable of
providing high quality performance in the engagement.

MONITORING

The firm’s inspection program policy is only internal in nature. For objectivity to be assured the firm
should have an external inspection program but it will not act as a substitute for the firm’s own internal
monitoring program.

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The firm should add a procedure against those who fail to comply with the policies and procedures of
the firm, especially those who do so repeatedly.

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The firm doesn’t necessarily need to conduct a special training seminar every time there were
deficiencies found in the review, I recommend that the specific training event be only used when
necessary as deemed by the partners or authorized personnel.

Complaints and allegations

The firm should add a procedure wherein it gives the option to use the services of an external third
party to investigate the complaints. Also, it should add another procedure which guides the firm to seek
legal counsel when necessary.
Documentation – the firm’s quality control manual did not specify a proper documentation system of
quality control.

The firm should establish policies and procedures requiring appropriate documentation to
provide evidence of the operation of each element of its system of quality control. How much matter
are documented is the firm’s decision. The firm retains this documentation for a period of time sufficient
to permit those performing monitoring procedures to evaluate the firm’s compliance with its system of
quality control, or for a longer period of required by law or regulation.