Peer Review Practice

April 4, 2019 by Sue Thompson
Audit & Accounting, Copeland Buhl

CPA firms who participate in the AICPA Peer Review Program are subject to Peer Review by an outside CPA firm every three years.  Participation in this program allows CPA firms to enhance their quality control policies and procedures, and to determine how their firm measures up to other firms and to learn firms’ best practices.  Copeland Buhl has the qualifications required to provide peer review services to CPA firms.

The selection of a Peer Reviewer is critical to receiving the full benefit of the CPA firm’s peer review.  Ideally, you want to match the experience of a peer reviewer to the CPA firm’s experience for maximum efficiency and insight.  At Copeland Buhl, we operate in a variety of industries including construction, not for profit, manufacturing, distribution, professional services, real estate, restaurants, and retail.  We also perform yellow book and employee benefit plan audits. 

Our goal is to provide our peer review clients with an efficient and cost-effective Peer Review that enhances the quality control and overall success of the firm’s accounting and assurance practice.

Approximately 32,000 CPA firms are likely to have a system, engagement, or report review over the next few years.  The three types of peer review are defined as follows, and will vary for our CPA firm clients depending upon the types of services their firms deliver.

System Review

A system review is a study and appraisal by an independent evaluator, known as a peer reviewer, of a CPA firm’s system of quality control to perform accounting and assurance (“A&A”) work. The quality control system represents the policies and procedures that the CPA firm has designed, and is expected to follow, when performing its work. As the peer reviewer, our objective is to determine whether the quality control system is designed to ensure compliance with professional standards and whether the firm is following its system appropriately.

Firms that perform engagements under the Statements on Auditing Standards (SASs), Government Auditing Standards (Yellow Book) or examinations of prospective financial statements under the Statements of Standards for Attestation Engagements (SSAEs) are subject to system reviews.

The scope of this type of peer review does not encompass other segments of a CPA practice, such as tax services or management advisory services, except to the extent that they are associated with financial statements, such as reviews of tax provisions and accruals contained in financial statements.                      

Engagement Reviews

This type of review is for firms that are not required to have a system review and are not eligible to have a report review.

Unlike system reviews, where a firm’s system for quality control policies and procedures are evaluated, an engagement review evaluates the firm’s financial statements and documentation with regards to conformance to AICPA professional standards.  As the reviewer, we do not express an opinion on the firm’s compliance with its own quality control policies and procedures or compliance with AICPA quality control standards.

An engagement review provides us with a reasonable basis for expressing limited assurance that:

  • The financial statements or information and the related accountant’s report on the accounting, review and attestation engagements the firm submits for review conform to professional standards
  • The reviewed firm’s documentation conforms with the requirements of professional standards

Firms that only perform compilations and reviews under Statements on Standards for Accounting and Review Services (SSARS) and/or services under the SSAEs not included in system reviews have engagement reviews.  Firms required to have an engagement review may also elect to have a system review. 

Report Reviews

A report review enables the reviewed firm to enhance the overall quality of its compilation engagements that omit substantially all disclosures.  A report review does not provide us, as the reviewer, a basis for expressing an opinion on the firm’s system of quality control for its accounting and auditing practice but it does enable us to provide comments and make recommendations as to whether the submitted financial statements and related accountant’s reports appear to conform with the requirements of professional standards.

Firms that only perform compilation engagements under SSARS where the firm has compiled financial statements that omit substantially all disclosures are subject to report reviews.  Firms required to have a report review may also elect to have a system or engagement review.

Please contact me at Copeland Buhl to discuss our Peer Review practice.

Sue Thompson

952 476 7119