To the Shareholders of
Bateman & Co. Inc., P.C.
and the SEC Practice Section Peer Review Committee
We have reviewed the system of quality control for the
accounting and auditing practice of Bateman & Co. Inc., P.C. (the firm)
in effect for the year ended June 30, 2001. A system of quality control
encompasses the firm’s organizational structure and the policies adopted
and procedures established to provide it with reasonable assurance of complying
with professional standards. The elements of quality control are
described in the Statements on Quality Control Standards issued by the
American Institute of Certified Public Accountants (the AICPA). The
design of the system, and compliance with it, are the responsibilities
of the firm. In addition, the firm has agreed to comply with the
membership requirements of the SEC Practice Section of the AICPA Division
for CPA Firms (the Section). Our responsibility is to express an
opinion on the design of the system, and the firm’s compliance with that
system and the Section’s membership requirements based on our review.
Our review was conducted in accordance with standards
established by the Peer Review Committee of the Section and included procedures
to plan and perform the review that are summarized in the attached description
of the peer review process. Our review would not necessarily disclose
all weaknesses in the system of quality control or all instances of lack
of compliance with it or with the membership requirements of the Section
since it was based on selective tests. Because there are inherent
limitations in the effectiveness of any system of quality control, departures
from the system may occur and not be detected. Also, projection of
any evaluation of a system of quality control to future periods is subject
to the risk that the system of quality control may become inadequate because
of changes in conditions, or that the degree of compliance with the policies
or procedures may deteriorate.
In our opinion, the system of quality control for the
accounting and auditing practice of Bateman & Co. Inc., P.C. in effect
for the year ended June 30, 2001, has been designed to meet the requirements
of the quality control standards for an accounting and auditing practice
established by the AICPA, and was complied with during the year then ended
to provide the firm with reasonable assurance of complying with professional
standards. Also, in our opinion, the firm complied during that year
with the membership requirements of the Section in all material respects.
December 13, 2001
__________________________________________
An Independent Member of the BDO Seidman Alliance
Attachment to the Peer Review Report of Bateman &
Co. Inc., P.C.
Description of the Peer Review Process
Overview
Member firms of the AICPA SEC Practice Section (the Section)
must have their system of quality control periodically reviewed by independent
peers. These reviews are system and compliance oriented with the objective
of evaluating whether:
The reviewed firm’s system of quality control
for its accounting and auditing practice has been designed to meet the
requirements of the Quality Control Standards established by the AICPA.
The reviewed firm’s quality control policies and procedures
were being complied with to provide the firm with reasonable assurance
of complying with professional standards.
The reviewed firm was complying with the membership requirements
of the SECPS in all material respects.
The Section’s Peer Review Committee (PRC) establishes and
maintains review standards. At regular meetings and through report evaluation
task forces, the PRC considers each peer review, evaluates the reviewer’s
competence and performance, and examines every report, letter of comments,
and accompanying response from the reviewed firm that states its corrective
action plan before the peer review is finalized. The staff of the Public
Oversight Board, an independent oversight body, plays a key role in overseeing
the performance of peer reviews working closely with the peer review teams
and the PRC.
Once the PRC accepts the peer review reports, letters
of comments, and reviewed firms’ responses, they are maintained in a file
available to the public. In some situations, the public file also
includes a signed undertaking by the firm agreeing to specific follow-up
action requested by the PRC. That file also includes the firm’s annual
report which contains information regarding the number of firm offices,
firm professionals, and SEC clients for which the firm is principal auditor-of-record.
Planning the Review
To plan the review of Bateman & Co. Inc., P.C., we
obtained an understanding of (1) the nature and extent of the firm’s accounting
and auditing practice, and (2) the design of the firm’s system of quality
control sufficient to assess the inherent and control risks implicit in
its practice. Inherent risks were assessed by obtaining an understanding
of the firm’s practice, such as the industries of its clients and other
factors of complexity in serving those clients, and the organization of
the firm’s personnel into practice units. Control risks were assessed
by obtaining an understanding of the design of the firm’s system of quality
control, including its audit methodology, and monitoring procedures. Assessing
control risk is the process of evaluating the effectiveness of the reviewed
firm’s quality control system in preventing the performance of engagements
that do not comply with professional standards.
Performing the Review
Based on our assessment of the combined level of inherent
and control risks, we identified practice units and selected engagements
within those units to test for compliance with the firm’s quality control
system. The engagements selected for review included audits of clients
that are SEC registrants and other audits. The engagements selected
for review represented a cross-section of the firm’s accounting and auditing
practice with emphasis on higher-risk engagements. The engagement
reviews included examining working paper files and reports and interviewing
engagement personnel.
The scope of the peer review also included examining selected
administrative and personnel files to determine compliance with the firm’s
policies and procedures for the elements of quality control pertaining
to independence, integrity, and objectivity; personnel management; and
acceptance and continuance of clients and engagements. In addition,
we tested compliance with the membership requirements of the Section, including
those pertaining to independence quality controls, and concurring partner
review.
Prior to concluding the review, we reassessed the adequacy
of scope and conducted an exit conference with firm management to discuss
our findings and recommendations.
