Romello Accounting LLP is a small CPA firm consisting of three partners and seven other professional staff. The firm offers full attestation and assurance services. Most of the work is for small and medium-sized nonpublic companies. The firm is registered with the PCAOB and does audits of about 30 penny stock or pink sheet companies and broker-dealers each year.
Tony Romello, the managing partner of the firm, has been the review partner on all audits for the last several years. Unfortunately, Tony encountered major health concerns in the last month and will not be available for the upcoming busy season. Michelle Thompson and Max King, the two remaining partners, are discussing staffing during the busy season.
“I am sorry that Tony is so ill, but I am concerned about our staff needs over the next three months. With two senior auditors and five staff auditors, we are all going to be very busy. I guess it is too late to hire experienced staff and get them trained quickly,” Michelle stated.
“Don’t forget that we will need a review partner,” Max mused. “Hey, I could be the review partner for your audits and you can be review partner on my audits.”
“I almost forgot that,” Michelle said. “But don’t we need to get a review partner who hasn’t worked on the audits the last two years? That would exclude both of us, since we are switching off audits every five years. . . . Hey, maybe we can get Tom Mullins, CPA, to be our review partner on a contract basis?”
Max immediately objected. “You know that, as a retired Big Four audit partner, he would eat up our slim profits with his contract rate. Let’s just make do this year and start planning to have a new partner by this time next year.”
“We can’t do that,” Michelle countered. “When we have the PCAOB inspections, we will get penalized. We would also be cited in our peer reviews. No, no, I’m not comfortable thinking of not having a review partner. Also, without Tony this year, you and I will be busy supervising the staff without the added responsibilities of being review partner.”
“Oh brother, you are such a rule follower!”
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