New Standards for Performing Peer Review
Mancuso, Anthony J., The CPA Journal
Fine Tuning the Self-Regulatory Process In response to the issuance of new quality control standards and the maturity of the program itself, the AICPA Peer Review Board issued new standards to update the Standards for Performing and Reporting on Peer Reviews.
The new standards
redefine an accounting and auditing practice for purposes of peer reviews.
require a risk-based approach in planning and performing peer reviews similar to that used on audits.
eliminate the restriction on team captains serving in that capacity on more than two successive reviews.
prohibit individuals from serving as reviewers if their ability to practice accounting has been limited or restricted by a regulatory, monitoring, or enforcing body.
revise the form of an adverse report on off-site reviews.
require a letter of response to be reviewed by a team captain or reviewer prior to submission to administrators.
require each member of a committee that has responsibility for acceptance of reviews to be associated with a firm that has received an unqualified report on its most recently completed peer review.
provide for various actions that may be taken as a result of deficient performance by reviewers.
The effective date of the new standards has been changed from that indicated in the exposure draft and is now effective for all peer review years beginning on or after January 1, 1997.
The AICPA Peer Review Board (board) issued new standards, updating the Standards for Performing and Reporting on Peer Reviews, as a result of the Statements on Quality Control Standards Nos. 2 and 3, issued in May 1996. The board revised the standards because it believed changes were appropriate now that the program has been in effect for many years and firms have undergone their second triennial review.
When Did It All Begin?
It all started in 1979 when the AICPA instituted a voluntary practice monitoring program as part of a new Division for CPA Firms, that was designed to distinguish member firms and provide the public with information about how member firms were complying with professional standards. The first statement on quality control standards was issued by the Quality Control Standards Committee in that year. At approximately the same time, the Auditing Standards Board issued SAS No. 25, The Relationship of Generally Accepted Auditing Standards to Quality Control Standards. That statement pointed out that generally accepted auditing standards and quality control standards are related.
The experience gained from this process showed that independent reviews of firms' procedures were an effective way to identify substandard practices as well as to assist firms in improving the quality of their work.
As part of strengthening the AICPA's self-regulatory effort, AICPA Council recommended the adoption of a mandatory practice monitoring program for all firms in its Plan to Restructure Professional Standards (the Anderson Report.) In 1988, a majority of the members of the AICPA voted for the adoption of the plan as a condition for AICPA membership for firms that did not belong to a voluntary program. In 1989, the first standards for performing and reporting on quality reviews were issued by the Quality Review Executive Committee. The program, originally named Quality Review, was later changed to Peer Review in 1995 when the quality review program and PCPS peer review programs were combined.
The first quality control standards identified nine elements of quality control a firm should consider in designing a quality control system. Statement of Quality Control Standards (SQCS) No. 2, System of Quality Control for a CPA Firm's Accounting and Auditing Practice, condensed and replaced the nine elements of a quality control system with five elements of quality control, and redefined a firm's accounting and auditing …
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Publication information: Article title: New Standards for Performing Peer Review. Contributors: Mancuso, Anthony J. - Author. Magazine title: The CPA Journal. Volume: 67. Issue: 6 Publication date: June 1997. Page number: 42+. © New York State Society of Certified Public Accountants Feb 2009. Provided by ProQuest LLC. All Rights Reserved.
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