What is Peer Review?
Peer review is an evaluation of the systems and/or work product of a public accounting practice by a qualified, fellow practitioner.
Which firms must undergo peer review?
Any firm or sole practitioner licensed in Oregon or Hawaii that performs attest and compilation services, including but not limited to: any level of review, audit, agreed-upon procedures, report on a financial statement, examinations of prospective financial statements, reports on internal control effectiveness, and compilations of a financial statement must undergo a peer review.
If the firm has an owner that is a member of the AICPA, the firm must be enrolled in an AICPA peer review program. However, if the firm does not perform services that include reports purporting to be in accordance with AICPA professional standards, it is not required to enroll in a practice-monitoring program.
Firms that do not have an owner that is a member of the AICPA may choose to enroll in an AICPA peer review program.
Does my firm have to enroll in peer review if the only engagements it performs are preparation services as detailed in SSARS No. 21?
If a preparation service is the highest level of engagement performed by the firm, the firm would not be required by the AICPA, the Oregon Board of Accountancy (BOA), or the Hawaii Board of Public Accountancy to enroll in a peer review program.
However, if a firm is already enrolled in a peer review program, this engagement would be included in the definition of a firm's accounting or auditing practice and would be within the scope of peer review. In addition, if a firm is already enrolled (even though not required) and chooses not to resign from the peer review program, that firm is subject to peer review if it performs these engagements as its only accounting or auditing engagements.
If a CPA or PA works in private industry, but performs one audit for a local charity, must the CPA or PA enroll and undergo a peer review?
Yes, and the peer review must be a system review. CPAs and PAs must enroll if they perform any financial statement engagements as part of their public accounting practice, no matter how limited. If the CPA or PA performs even one audit of historical or prospective financial statements, the firm is subject to a system review. If the CPA or PA performs one or more compilations, reviews or agreed-upon procedures, but no audits or examinations, the firm qualifies for an engagement review.
What must CPAs in public practice do to maintain their AICPA memberships if their firms enroll in the peer review program?
Nothing, as long as the AICPA shows the CPA as employed by a firm enrolled in the AICPA peer review program. The AICPA requires all members in public practice to be associated with an enrolled firm. Firms may be enrolled in the AICPA Peer Review Program.
What if I am a member of the AICPA, but I am employed by a firm whose owners, partners, shareholders, etc. are not members of the AICPA?
The firm may enroll in the AICPA peer review program. If the firm's partners, shareholders, etc. choose not to enroll in the AICPA peer review program, the member may enroll in the AICPA peer review program if the services performed by such a firm or individual are within the scope of the AICPA’s practice-monitoring Standards and the firm or individual issues reports purporting to be in accordance with AICPA professional standards.
When do firms undergo Peer Review?
A firm performing financial statement engagements must have a peer review every three years. When firms enroll in the program they are notified of their initial review date via an email from email@example.com. In general, a firm is given a review due date either 18 months after the fiscal year of the first financial statement engagement performed, or 18 months from the time the firm enrolls in a peer review program.
What's the difference between a system and engagement review?
If the firm performs audits of historical financial statements or examinations of prospective financial information, the firm must undergo a system review. A system peer review is intended to provide the reviewer with reasonable assurance for expressing an opinion on whether, during the period under review, the firm's system of quality control for its accounting and auditing practice met the objectives of quality control established by the AICPA, and was complied with in order to provide the firm with reasonable assurance of conforming with professional standards.
If the firm performs only reviews and compilations of financial statements, the firm may have an engagement review. An engagement review has a limited scope which precludes the reviewer from expressing assurance on the firm's quality control system. Instead, the reviewer's report focuses on whether the selected financial statements and accountant's reports comply with professional standards in all material respects.
For more information about the peer review process, check out the Peer Review FAQs
What happens if the reviewer finds deficiencies? Is this information available to the Board of Accountancy?
The peer review program is remedial and educational, not punitive. When the reviewer issues a pass with deficiency(ies) or fail report, the Report Acceptance Body (RAB) may require corrective action. The corrective action is intended to be educational and specific to the particular deficiency. For Oregon firms, both the report and the firm's response, along with RAB's acceptance letter, will be available to the BOA via the Facilitated State Board Access (FSBA). Hawaii firms, upon completion of a peer review, shall submit a peer review compliance reporting form to the board pursuant to HRS section 466-38, a copy o f the peer review report, letter of acceptance and completion letter (if applicable), within 30 calendar days of receipt of notice of completion.
Peer review documents of firms enrolled in the AICPA or OSCPA Peer Review Program are confidential, unless the firm is a member of the PCPS, the Center for Public Company Audit Firms, or the Employee Benefit Plan Audit Quality Center, or Governmental Audit Quality Center.
Because many firms are required to submit peer review documents to various Boards of Accountancy, Facilitated State Board Access was introduced in January 2009.
Who performs reviews?
The AICPA maintains a reviewer bank. A reviewer or review team can be selected by the firm undergoing peer review (Firm-on-Firm), the OSCPA (Committee Appointed Review Team or CART) or an association of CPA firms authorized to perform peer reviews. Reviewers must be registered with the AICPA reviewer bank and meet the reviewer requirements to perform peer reviews. CART reviews are not available for a system review but are available for engagement reviews.
How much does a review cost?
The cost depends on the type of review the firm requires. CART review fees are set by the OSCPA Board of Directors. Other review fees are negotiated between the reviewed firm and the reviewer. In addition to the reviewer's fees and expenses, there is an administrative fee, scheduling fee for CARTs, and a technical review fee.
The OSCPA meets its peer review program expenses through administrative fees and scheduling fees set by the OSCPA Board of Directors. View the current fees.
How can a firm prepare for peer review?
The firm members may consider the following in preparing for their review:
- Is the firm committed to the practice of public accounting?
- Does the firm know and use the five elements of quality control?
- Are the firm's documents updated and available for the reviewer to examine?
- Is the firm monitoring its accounting and/or auditing practice?
- Are there any new materials needed?
- Is the review scheduled through an approved, practice-monitoring program?
What is Facilitated State Board Access?
See State Board Access resource.
Questions about AICPA Peer Review Integrated Management Application (PRIMA)?
See the AICPA PRIMA FAQs.