Peer Review for CPA Firms
Firms (and individuals) that provide audits, reviews, compilations, or other assurance services are required to have a peer review, once every three years, of their accounting and auditing practice.
The peer review helps to monitor a CPA firm’s accounting and auditing practice (practice monitoring). The goal of the practice monitoring, and the program itself, is to promote and enhance quality in the accounting and auditing services provided by the CPA firms subject to these standards. This goal serves the public interest and enhances the significance of accounting and audit quality.
Roy most often performs both system and engagement peer reviews in the states of Arizona and California, but can consider other states on a case-by-case basis.
Read more about the two types of peer reviews (as outlined by the AICPA’s Peer Review Program FAQs) below:
System Peer Review
System Review is designed to provide a peer reviewer with a reasonable basis for expressing an opinion on whether, during the year under review:
a. The reviewed firm’s system of quality control for its accounting and auditing practice has been designed in accordance with quality control standards established by the AICPA and
b. The reviewed firm’s quality control policies and procedures were being complied with to provide the firm with reasonable assurance of performing and reporting in conformity with applicable professional standards in all material respects.
This type of review is for firms that perform engagements in accordance with the Statement on Auditing Standards (SASs,) the Government Auditing Standards (Yellow Book), examinations under the Statement on Standards for Attestation Engagements (SSAEs) or engagements under the PCAOB standards.
The majority of the procedures in a System Review are normally performed at the reviewed firm’s office.
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 they are associated with financial statements, such as reviews of tax provisions and accruals contained in financial statements.
Engagement Peer Review
The objective of an Engagement Review is to evaluate whether engagements submitted for review are performed and reported on in conformity with applicable professional standards in all material respects.
Enrolled firms that only perform services under SSARSs or services under the SSAEs that do not require System Reviews are eligible to have Engagement Reviews.
An Engagement Review consists of reading the financial statements or information submitted by the reviewed firm and the accountant’s report thereon, together with the applicable documentation required by professional standards.
An Engagement Review does not provide the review captain with a basis for expressing any form of assurance on the firm’s system of quality control for its accounting practice. However, firms eligible for an Engagement Review may elect to have a System Review.
If you’re unsure about which category your peer review would fall under, contact Roy for clarificataion.