Governmental Audit Quality Center (GAQC) – firm membership

An audit partner refers to a person who is responsible for the firm's governmental audit practice (effective at GAQC admission date). This individual:

• Is legally a partner, owner, or shareholder in a CPA firm or a sole practitioner

• Performs audit services, concurring reviews (if applicable), or consultations on technical or industry-specific issues with respect to audit clients of the firm

• Should be party to any partnership, ownership, or shareholder agreement of a CPA firm

A firm's governmental audit practice includes all audits and attestation engagements performed under Government Auditing Standards of federal, state, or local governments; not-for-profit organizations; and certain for-profit organizations (e.g., single audits, program-specific audits, and other compliance audits and attestation engagements performed under various federal, state, or local agency audit guides).

All audit partners of the firm must reside in the United States and be a member of the AICPA (effective at GAQC admission date).

Although only audit partners residing in the United States and eligible for AICPA membership must be members of the AICPA, member firms must encourage all other firm professionals who are eligible for membership in the AICPA to enroll as individual AICPA members.

Member firms must use best efforts to ensure compliance with this membership requirement.

Best efforts include (a) annually advising each audit partner that AICPA membership is mandatory and (b) taking appropriate corrective action in the event that the firm detects noncompliance.

The audit partner that has been designated with firm-wide responsibility for the quality of the firm’s governmental audit practice must meet the continuing professional education (CPE) requirements of Government Auditing Standards, even if that partner would not otherwise be subject to those CPE requirements. (Effective at GAQC admission date.)

The audit partner that has been designated with firm-wide responsibility for the quality of the firm's governmental audit practice must participate in an annual GAQC-sponsored webcast on recent developments in governmental auditing. (Effective at GAQC admission date.)

The audit partner may either participate in the live webcast or an archived version available on aicpa-cima.com.

Your firm will need to establish policies and procedures specific to the firm’s governmental audit practice that comply with the applicable professional standards and GAQC membership requirements.

These policies and procedures must be documented and appropriately communicated. (Effective within 6 months of a firm’s admission date.)

In addition to meeting the quality control standards requirement for monitoring, establish annual internal inspection procedures.

Annual internal inspection procedures must include a review of the firm's governmental audit practice by individuals who have current experience and knowledge of the accounting and auditing practices specific to governmental audits.

The engagements inspected should be representative of the firm’s governmental audit practice and consider:

1. The number and different types of governmental audits (e.g., single audits, program-specific audits, and other compliance audits and attestation engagements performed under various federal, state, or local agency audit guides)

2. The various locations at which those audits are performed

The internal inspection results specific to the firm's governmental audit engagements should be made available to the firm's peer reviewer.

Further, the firm's monitoring process should include a review of the firm's compliance with the GAQC membership requirements.

(Effective within 3 months of admission date, a firm must establish annual internal inspection procedures.)

A peer review does not substitute for monitoring procedures.

However, because the objective of a peer review is similar to that of inspection procedures, a firm’s quality control policies may provide that a peer review conducted under standards established by the AICPA may substitute for some or all of its inspection procedures for the period covered by the peer review.

Make publicly available information about its most recently accepted peer review as determined by the GAQC Executive Committee. (Effective at GAQC admission date.)

The GAQC Executive Committee has determined that GAQC member firms are required to make publicly available the following information, if applicable, relative to the firm’s peer review:

• Peer review report

• Letter of comment, if applicable

• Letter of response, if applicable

• Letter signed by the reviewed firm indicating that the peer review documents have been accepted with the understanding that the firm agrees to take certain actions, if applicable

• Letter notifying the firm that certain required actions have been completed, if applicable

• Letter notifying the firm that the peer review has been accepted

Have its governmental audits selected as part of the firm's peer review reviewed by a peer review team member who is employed by a GAQC member firm.

(Effective for peer reviews commencing on or after admission date.)

Periodically, GAQC members will need to file information about the firm and its governmental audit practice with the GAQC and agree to make such information available for public inspection, as determined by the Executive Committee.

The Executive Committee has determined that GAQC member firms are required to file with the GAQC the following information:

• Firm name and address

• Status as a member of the Center for Public Company Audit Firms, Employee Benefit Audit Quality Center, and/or Private Companies Practice Section (AICPA Alliance of CPA Firms)

• Name and contact information of the designated audit partner with firm-wide responsibility for the quality of the firm's governmental audit practice

• Name and contact information of the firm's designated GAQC contact administrator if different from designated partner

• Total number of:

  • CPAs in owner's group

  • CPAs in firm, professional staff, and firm personnel

• Approximate number of:

  • Single audits (i.e., 1–10, 11–25, 26–50, 51–100, 101–500, over 500)

  • Governmental audits, inclusive of single audits (i.e.,1–10, 11–25, 26– 50, 51–100,101–500, 501–1,000, over 1,000)

Additional requirements may be established by the GAQC Executive Committee and approved by the AICPA Board of Directors; these requirements will be shared via GAQC Alerts.