SQCS 7 requires a policy for engagement quality control reviews in all CPA firms. There is no size cutoff. However the rules do anticipate great flexibility in establishing the criteria.
It is perfectly appropriate to fine tune the criteria so that a relatively small number of engagements would be selected. How?
In a firm that is stable, which means no changes in the level of services, serving the same types of industries they have served before, and no significant turnover amongst senior staff, then it might be very rare to need to perform an engagement quality control review. The criteria can be set accordingly.
It would be intellectually dishonest to set the criteria such that there could never be an engagement that meets the criteria. That might cause a problem during a peer review. However, it would be perfectly acceptable for a firm to go many years without ever performing engagement quality control review with reasonable criteria and a stable firm.
For example, consider a CPA firm that is primarily focused on providing tax services with a small number of compilations over the course of a year. In such a case it would be perfectly reasonable to write the criteria to get an engagement quality control review for the first one or two engagements if the firm begins to provide reviews or audits. If the partner or partners never take on any reviews or audits then there would never be a need for an engagement quality control review. That would be perfectly reasonable. I think this describes the situation for a very large number of firms.
Now, about that requirement that the review be performed by someone with no involvement on the engagement…..
What to do when there’s only one partner or the audit was an all-hands effort involving everyone? I am familiar with several firms where all of the partners are involved on an audit.
In those situations, you will need to go outside the firm. One option is to find another firm that needs to have an occasional review and exchange services. Another option would be to contract with your peer reviewer. To maintain independence this would not be a possibility in the year of your peer review or the prior year.