About Peer Review
 “Our clients and the third party users of financial statements deserve only the best, and because that is our responsibility, we have participated in the peer review process since its inception. I feel that our firm’s peer review is designed to educate and to encourage work that promotes adherence to standards that protect the clients’ interests and improves our profession. I also believe that a profession that holds its members to a high standard of excellence assures our clients and third party users of good information to make informed decisions. I would encourage other firms to get involved in the peer review process, and by doing so, they too will reap the benefits."
Shannon Knipp, CPA
WSCPA Member Since 1996 |
The American Institute of CPAs (AICPA) established the Peer Review Program nearly 20 years ago to enhance the quality of accounting, auditing and attestation services performed by AICPA members in public practice. The AICPA Peer Review Program illustrates the accounting profession’s dedication to integrity and protection of the public and is driven by adherence to the highest possible professional standards.
The AICPA Peer Review Program is well-respected by both practitioners, state boards of accountancy and other users of the peer review process, who recognize the program as an effective quality improvement tool.
Since 1977, over 50,000 CPA firms have undergone more than 160,000 peer reviews, resulting in reports that provide insight into participating firms’ quality control standards and their real-world use of those standards. Approximately 32,000 firms are currently subject to peer review, with 41 individual state CPA societies serving as administering entities in the 55 licensing jurisdictions. Currently, 39 states require peer review as a condition of licensure.
For more information about peer review please visit http://www.aicpa.org/Professional+Resources/Peer+Review. |
IMPORTANT PEER REVIEW COMMUNICATION INFORMATION - visit http://www.wscpa.org/Content/39327.aspx
FAQ
What is Peer Review and Why is it Important?
Peer review provides a mechanism for a firm to engage a peer firm to review its system of quality control related to its application of professional accounting, auditing and attestation standards. The AICPA Peer Review Program is important because it strengthens member firms’ quality control and encourages firms to improve processes and correct any shortcomings. Peer review enhances the quality of the profession and contributes to the public’s confidence in the profession.
What are the Various Types of Peer Reviews?
There are two types of peer reviews: system reviews, and engagement reviews. The type of peer review that is performed on a CPA firm is dependent upon the type of work that a firm delivers to its clients.
What is a System Review and Which Firms Receive Them?
A system review is a study and appraisal by an independent evaluator(s), known as a peer reviewer, of a CPA firm’s system of quality control to perform accounting and auditing (“A&A”) work. The quality control system represents the policies and procedures that the CPA firm has designed, and is expected to follow, when performing its work. The peer reviewer’s objective is to determine whether the quality control system is designed to ensure compliance with professional standards and whether the firm is following its system appropriately.
Firms that perform engagements under the Statements on Auditing Standards (SASs), Government Auditing Standards (Yellow Book) or examinations of prospective financial statements under the Statements of Standards for Attestation Engagements (SSAEs) are subject to system reviews.
Approximately 15,000 firms are likely to have a system review over the next three years. The scope of the peer review does not encompass other segments of a CPA practice, such as tax services or management advisory services, except to the extent that they are associated with financial statements, such as reviews of tax provisions and accruals contained in financial statements.
What is an Engagement Review and Which Firms Receive Them?
This type of review is for firms that are not required to have a system review.
Unlike system reviews where a firm’s system for quality control policies and procedures are evaluated, an engagement review evaluates the firm’s financial statements and documentation with regard to conformance to AICPA professional standards. The reviewer does not express an opinion on the firm’s compliance with its own quality control policies and procedures or compliance with AICPA quality control standards.
An engagement review provides reviewers with a reasonable basis for expressing limited assurance that:
Firms that only perform services under Statements on Standards for Accounting and Review Services (SSARS) and/or services under the SSAEs not included in system reviews have engagement reviews.
More than 14,000 firms are likely to have an engagement review over the next three years.
Who is Involved in Peer Review?
Peer Review Board
The Peer Review Board (“Board”) is the twenty member governing body of the AICPA Peer Review Program. It is responsible for conducting the program and carrying out its activities, which include establishing and updating the AICPA Standards for Performing and Reporting on Peer Reviews (“Standards") and issuing related guidance.
State Societies
The AICPA Peer Review Program is administered in cooperation with the state CPA societies and other administering entities. When a CPA firm is enrolled in the AICPA Peer Review Program, its peer review will be administered by the administering entity in the state in which the CPA firm’s main office is located or, if that state CPA society has elected not to participate, by another administering entity. The AICPA Peer Review Board approves all administering entities annually. Peer reviews are administered and accepted in accordance with the Standards and other guidance adopted by the Board.
Peer Review Committees
The Peer Review Committee of a particular state oversees the peer reviews administered and performed in that state or in other states it has agreed to administer. It establishes procedures for ensuring that peer reviews are performed in accordance with professional Standards and related guidance materials. It also establishes procedures to ensure consistent application of the Standards and guidance related to overdue reviews, follow-up actions, handling reviewer performance issues and disagreements. The Committee is responsible for ensuring that reviews are presented to a report acceptance body in a timely manner and for evaluating whether peer reviews have been performed in accordance with Standards and related guidance.
Peer Reviewers
Peer reviewers are active AICPA members in good standing, licensed to practice as certified public accountants, who have met certain knowledge, experience and training requirements. Peer reviewers conduct system and engagement reviews for firms when engaged to do so. There are two types of peer reviewers – team captains and review captains.
Team captains are those who are qualified to perform all types of peer reviews.
Review captains are those who are qualified to perform engagement reviews and may also assist team captains in various aspects of the system review.
In certain situations, it is also possible for a professional to be involved in peer review as a team member without the specialized training requirement, where they only review specific areas of quality control or engagements on a system review.
In addition to adhering to the general requirements in paragraph 31 to be a peer reviewer, a System Review team captain must be a partner. For an Engagement Review, the review captain is not required to be a partner. The team captain, or the review captain in limited circumstances, is required to ensure that all team members possess the necessary capabilities and competencies to perform assigned responsibilities and that team members are adequately supervised. The team captain or review captain has the ultimate responsibility for the review, including the work performed by team members. Also, team captains and review captains should have completed peer review training that meets the requirements established by the board. For additional team captain qualification requirements, see the Interpretations.
