Peer Review Facts
Types of Peer Review
There are three types of peer reviews – system, engagement and report. An accounting and auditing practice is defined as all of a CPA firm’s engagements that are covered by AICPA SASs, SSARSs, and SSAEs and Government Auditing Standards issued by the U.S. General Accounting Office.
What is a system review?
This type of review is for firms that perform engagements under the SASs, the Government Auditing Standards or examinations of prospective financial information under the SSAEs.
What is an engagement review?
This type of review is for firms that are not required to have system reviews and are not eligible to have report reviews. The objectives of an engagement review are to provide the peer reviewer with a reasonable basis for expressing limited assurance of conformity with professional standards and requirements of SSARSs and SSAEs.
Can I Have an Engagement Review If My Firm Has Only One Audit?
No. You must have a system review even if your firm performs only one audit.
What is a report review?
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 compilations referred to in SSARS.
What is the reporting requirement of the report review?
A Peer Reviewer’s comments should be relevant and supportable by professional standards, giving the firm guidance for improving the overall quality of its omit-disclosure compilation engagements. An authorized member of the reviewed firm is required to sign the report and then submit the signed copy to the administering entity.
What Types of Engagements Does a System Review Cover?
A system review should cover a firm’s accounting and auditing practice. The scope of the peer review does not encompass other practice segments, such as tax or management advisory services, except to the extent they are associated with financial statements.
How do I Switch From an Engagement or a Report Review to a System Review (or Vice Versa) Because I Acquire or Give Up an Audit Engagement?
If you have an Information Required for Scheduling Reviews form, simply complete the form, return it to your administering entity and your records will be updated. Otherwise, you should notify the administering entity in a letter of the change in your firm’s practice.
How Much Will the Peer Review Cost?
Reviewers typically charge regular hourly rates for time spent conducting peer reviews. In addition, firms pay an annual administrative fee to the administering entity.
Are There Ways to Reduce the Costs of My Peer Review?
Yes. The best way to reduce costs is to have complete, accurate information available for the reviewer(s) 30 to 40 days in advance. Also make sure everyone understands the importance of performing engagements in accordance with professional standards, and properly documenting engagement planning issues, key procedures and conclusions.
How Confidential are Peer Reviews?
A peer review must be conducted in compliance with the AICPA Code of Professional Conduct. Information concerning the reviewed firm or any of its clients or personnel, including the findings of the review, is confidential.
How can I find out more about the Peer Review Process?
Having a current AICPA Peer Review Program Manual is a key tool for the successful completion of a peer review. The Manual contains guidance on how to prepare for the Peer Review and includes the standards that govern peer reviews.
For questions about the AICPA Peer Review Program, contact the INCPAS Peer Review Department at (317) 726-5000 or e-mail info@incpas.org.
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