CPA firm peer review process
CPA firms that are enrolled in the the American Institute of Certified Public Accountants (AICPA) Peer Review Program are required to have a peer review once every three years. The peer review is an external review of a firm’s quality control system as it applies to its accounting and auditing practices.
Peer reviewers are required to be active AICPA members in good standing, licensed CPAs who have met certain knowledge, training, and experience requirements. There are two types of peer reviewers – team captains and review captains.
Reviews ensure that firms are performing at a high standard and also provide opportunities for firms to make improvements to the quality of their services. The six elements of quality control that will be looked at by the peer reviewers are:
- Leadership responsibilities for quality within the firm
- Relevant ethical requirements
- Acceptance and continuance of client relationships and engagements
- Human resource
- Engagement performance
The peer review preparation process is labor-intensive, involving research, document gathering and analysis and discussions. Therefore, when preparing for a peer review, having a plan already in place will be of great help, you will be organized and ready for the reviewers.
For the good of the CPA community
The CPA firm peer review process provides a vehicle for a firm to employ the services of a peer firm in order to review its systems of quality control as it relates to its implementation of professional accounting, auditing, and attestation standards.
While it can be a stressful experience, it’s important that a firm be able to identify problems, work to rectify those problems, and optimize their processes in order to provide better audits.
Each year the AICPA EAQ initiative prioritizes a number of issues to focus on that pertain to audit quality in an effort to increase awareness of the most common auditing errors identified by the peer review process. Most errors appear to occur in the following areas:
- Risk assessment of clients
- Inadequate or no audit documentation
- Failure in understanding a client’s internal controls
- Failure to assess risks related to material estimates
Preparing for your next peer review
The California Society of CPAs administers the AICPA Peer Review Program for enrolled firms in the state. If you are looking for the best CPA firm in your area, the society provides a listing of all firms in the state that are qualified as reviewers.
At GYL CPAs and Advisors, we provide system and engagement reviews as well as a full range of supporting services for small to medium-sized firms. A few of the industries we specialize in are auto dealerships, not-for-profits, commercial real estate companies and manufacturing and/or distribution companies located in and around the city of San Diego as well as throughout California.
We provide our clients with AICPA peer review checklists which provide your firm with a way to document its system of quality control. Contact us to learn more about our practice areas and qualified team.