Peer Review Services

peer review

With over 25 years of experience in providing auditing and accounting services as a CPA in a broad variety of industries, CAWIGGAN CPA LLC focuses on performing Peer Reviews for sole practitioners and small CPA firms that provide auditing and/or accounting services pursuant to the AICPA professional standards.

As a former audit partner and CPA firm Quality Control Leader, CAWIGGAN has an in depth understanding of the Peer Review process from the CPA firm’s management perspective. Currently, CAWIGGAN also provides Quality Control and Engagement Quality Review services for CPA firms and as such remain current on newly issued accounting and auditing standards impacting GAAS audit execution and GAAP financial reporting. The Peer Review process provides a unique opportunity for an independent party to evaluate your firm’s approach, execution and documentation pursuant to professional standards. The process also provides an important value proposition in the form of constructive commentary that can have a positive impact on the effectiveness, efficiency and quality of your auditing and accounting services.

Below are a few Frequently Asked Questions about the Peer Review program:

SOURCE: Peer Review Program Manual

In order to be admitted to 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 practicing in firms not eligible to enroll, are themselves enrolled in such a 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.

Firms have peer reviews because of the public interest in the quality of the accounting, auditing, and attestation services provided by public accounting firms. In addition, firms indicate that peer review contributes to the quality and effectiveness of their practices. Furthermore, most state boards of accountancy require its licensees to undergo peer review to practice in their state. Other regulators require peer review in order to perform engagements and to issue reports under their standards.

When should my firm enroll in the AICPA Peer Review Program?

When an individual becomes an AICPA member, and the services provided by his or her firm (or individual) fall 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, the firm should enroll in the Program by the report date of the initial engagement.

Does my firm have to enroll in a peer review program if the only engagements it performs are engagements to prepare financial statements under AR-C section 70?

For purposes of complying with AICPA membership requirements, a firm that only performs engagements to prepare financial statements under AR-C section 70 is not required to enroll in a peer review program. For firms already enrolled in the Program, engagements to prepare financial statements would fall within the scope of peer review. Independent of AICPA requirements, please note that some State Board of Accountancy (SBOA) require firms that only perform these engagements to enroll in peer review as a licensing requirement. You should check with the SBOA(s) where you perform such engagements to determine whether you need to enroll in peer review.

What are the types of peer reviews? There are two types of peer reviews - System and Engagement. System Reviews focus on a firm’s system of quality control, and Engagement Reviews focus on work performed on selected engagements.

What is a System Review?

A 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.

What is an Engagement 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.

Once enrolled, when should my firm expect to have its first peer review?

A firm's due date for its initial peer review is ordinarily 18 months from the date it enrolled in the Program, or should have enrolled, whichever date is earlier. A firm's subsequent peer review ordinarily has a due date of three years and six months from the year-end of the previous review. Firms should also check with their SBOA for any peer review requirements. In determining the appropriate due date, the firm’s AE will consider the firm’s (or individual’s) practice, the year-ends of their engagements, the report dates of their engagements, when the engagements were performed and the number and type of engagements to be encompassed in the review.

What period should my firm’s peer review cover?

The peer review covers a one-year period mutually agreed upon by you and the reviewer and normally should not change from review to review. Engagements selected for review in a System Review would generally be those with periods ending during the year under review, except financial forecasts or projections and agreed upon procedures. Financial forecasts and/or projections and agreed upon procedures with report dates during the year under review would be subject to selection. If the current years’ selected engagement is not completed and a comparable engagement within the peer review year is not available, the prior years’ engagement will likely be reviewed. If the subsequent years’ engagement has been completed, the peer review team will consider, based on its assessment of peer review risk, whether the more recently completed engagement should be reviewed instead. The criteria for selecting the peer review year-end and the period to be covered by Engagement Reviews are the same as those for a System Review.