Thus, a modified or adverse report on an Engagement review takes exception to the limited assurance. If the report indicates the need for corrective action, the firm is expected to indicate in writing what it will do to correct the problem. In a System review, the firm s response advises of changes made to the system of quality control. In an Engagement review, the response ordinarily advises of actions taken on individual engagements. If there are serious problems, the firm will usually be required to undertake additional education, agree to a revisit by the reviewer, or to submit to another peer review within a short time.
Most firms receive an unmodified report.
However, approximately 14 percent of the peer reviews conducted to date resulted in reports which took exception to some aspect of the firm s system of quality control or concluded that the system was not adequate. This is an indication that peer review is a serious, rigorous and independent test of a firm s quality controls. The Program s philosophy in dealing with firms that do not receive unmodified reports on their peer review is remedial rather than punitive, in keeping with the overall goals of improving the quality of practice. However, a firm that fails to take necessary corrective action risks loss of its membership in the Program. This may, in turn, have other effects on the firm s practice, such as limitations on the types of engagements the firm can undertake and higher professional liability insurance premiums .