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• The process
• oversight program
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Reviewer
Database
• Forms
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Frequently Asked Questions
(For further information on questions and answers for Peer Review,
click on this link provided by the AICPA)
- Does my firm have to enroll in a practice-monitoring program if it does not have an accounting and auditing practice?
- What are the types of peer reviews?
- What is a system review?
- What is an engagement review?
- What is a report review?
- Can I have an engagement review if my firm has only one audit?
- What types of review teams are available to conduct my firm's peer review?
- What is required to be a peer review program reviewer?
In order to be admitted or retain their membership in the AICPA, members of the AICPA who are engaged in the practice of public accounting in the United States or its territories are required to be practicing as partners or employees of firms enrolled in an approved practice monitoring program, or if authorized by AICPA Council, are themselves enrolled in such a program if the services performed by such firm or, respectively, individual issues reports purporting to be in accordance with AICPA professional standards. If a firm does not perform services that include issuing reports purporting to be in accordance with AICPA professional standards it is not required to enroll in a practice-monitoring program. For purposes of the AICPA Peer Review Program Standards, an accounting and auditing practice is defined as all of a CPA firm’s engagements performed under the Statements on Auditing Standards (SASs), Statements on Standards for Accounting and Review Services (SSARS)*, Statements on Standards for Attestation Engagements (SSAEs) and Government Auditing Standards (the Yellow Book), issued by the U.S. General Accounting Office (GAO).
* SSARS that provide an exemption from those standards in certain situations are excluded from the
definition of an accounting and auditing practice for peer review purposes.
What are the types of peer reviews?
There are three types of peer reviews - system, engagement and report.
This type of review is for firms that perform engagements under the Statement on Auditing Standards (SASs,) the Government Auditing Standards (Yellow Book) or examinations of prospective financial information under the Statement on Standards for Attestation Engagements (SSAEs). The objective of a system review is intended to provide the reviewer with a reasonable basis for expressing an opinion on whether, during the year under review as to whether the reviewed firm:
- Has designed its system of quality control for its accounting and auditing practice in accordance with AICPA quality control standards.
- Is complying with its quality control policies and procedures in a way that will provide the firm with reasonable assurance of conforming with professional standards.
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 they are associated with financial statements, such as reviews of tax provisions and accruals contained in financial statements. In a system review, the reviewer will study and evaluate a CPA firm’s quality control policies and procedures that were in effect during the peer review year. This includes interviewing firm personnel and examining administrative files. To evaluate the effectiveness of the system and the degree of compliance with the system, the reviewer will test a reasonable cross-section of the firm’s engagements with a focus on high-risk engagements in addition to significant risk areas where the possibility exists of engagements being performed and/or reported on that are not in accordance with professional standards in all material respects.
This type of review is for firms that are not required to have a system review, as discussed above, and are not eligible to have a report review, as discussed below. The objectives of an engagement review are to provide the peer reviewer with a reasonable basis for expressing limited assurance that:
- The financial statements or information and the related accountant’s report on the accounting, review and attestation engagements the firm submits for review conform, in all material respects, with professional standards.
- The reviewed firm’s documentation conforms with the requirements of Statement on Standards for Accounting and Review Services (SSARS) and the Statements on Standards for Attestation Engagements (SSAEs), as applicable, in all material respects.
This type of review does not cover the firm’s system of quality control, so the reviewer cannot 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 consists of reading the financial statements or information submitted by the
reviewed firm and the accountant’s report thereon, together with certain background information and representations provided by the reviewed firm on the engagements submitted for review, and reviewing the documentation required by SSARS and the SSAEs submitted by the reviewed firm.
Some examples of documentation include:
- Management representation letter on a review engagement.
- Working papers documenting the matters covered in the accountant’s inquiry and analytical procedures on a review of financial statements.
Engagement reviews should improve the quality of engagements and should protect the public that uses and relies on those reports without imposing any additional burden on reviewed firms. More than 10,000 firms are likely to have an engagement review over the next three years.
Firms performing only compilations that omit substantially all disclosures are eligible to have report reviews. However, a firm must have an engagement review if it performs, as its highest level of service--compilations referred to in Statement on Standards for Accounting and Review Services (SSARS) as “selected information—substantially all disclosures required are not included.” A report review retains the overall integrity of peer review through a streamlined process. The objective of a report review is to enable the reviewed firm to enhance the overall quality of its compilation engagements that omit substantially all disclosures. To accomplish this objective, the reviewer provides comments and recommendations based on whether the submitted financial statements and related accountant’s reports appear to conform with the requirements of professional
standards in all material respects. The reviewer provides comments and identifies those considered significant. Firms required to have a report review may elect to have a system or engagement review. On a report review, a reviewer will evaluate a CPA firm’s financial statements, accountant’s report, the working paper documentation applicable to the SSARS and SSAEs as applicable to those engagements, and certain background information and representations provided to the reviewer.\
Can I have an engagement review if my firm has only one audit?
No. You must have a system review even if your firm only performs one audit. The purpose of an audit is to give assurance to third parties. Because of that third party reliance, state regulators allow these services to be performed by CPAs only. As such, the profession has a responsibility to ensure that a CPA firm that performs even one audit has an adequate system of quality control over its accounting and auditing practice. Such assurance can only be obtained by reviewing the system of quality control, your firm’s compliance with that system, and by reviewing engagement working papers along with the report and financial statements.
What types of review teams are available to conduct my firm's peer review?
- Firm-on-Firm Review - You hire another qualified CPA firm to conduct the review. This option gives you a degree of personal assurance that the reviewer's qualifications fit your firm's needs. It also gives you more control over the cost of the review. This type of review is for all reviews.
What is required to be a peer review program reviewer?
AICPA peer review program reviewer requirements are as follows:
- Must be an AICPA member
- Must be licensed to practice as a CPA
- Must have current knowledge of applicable professional standards
- Must be currently active in the practice of public accounting at a supervisory level in the accounting and auditing function of a firm that is enrolled in the AICPA Peer Review Program or is a member of the SEC Practice Section or the Private Companies Practice Section of the Division for CPA firms (an enrolled firm)
- Must have achieved the level of either (a) owner or (b) manager or person with equivalent supervisory responsibilities
- If the individual's firm has been reviewed, must be associated with a firm that received an unqualified report on its last peer review.
Special requirements of System Review team captains:
- Must have at least five years of recent experience in the accounting and auditing function for prior peer reviews.
- Must be associated with an enrolled firm that has received an unqualified report on its peer review within the last three years (to perform a System Review, the prior review must have been on-site)
- Must have attended an approved reviewers' training course during the three years prior to the commencement of the peer review
- Must be an owner of an enrolled firm
A reviewer must be registered in the AICPA Reviewer Database before he or she may conduct a peer review.
For further information on questions and answers for Peer Review,
click on this link provided by the AICPA
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