|
|
|
|
For more information on the AICPA Peer Review Program in Arkansas, Contact Marsha Moffitt, Peer Review Manager at mmoffitt@arcpa.org The Peer Review ProcessPrior
to the scheduled commencement date of your peer review, your reviewer will
contact you requesting information that will be needed to guide him/her through
the engagement selection process. In
system
reviews,
the engagement selection process is not subject to definitive criteria; however,
the review team usually selects those engagements that make up 5 to 10% of your
total accounting and auditing hours. The
actual percentage may be higher depending on the make-up of your firm and its
practice. In
engagement
and report
reviews,
the reviewer will inform you of the number and types of engagements selected to
be reviewed. Once you have received
the engagement selection, you will be responsible for submitting to the reviewer
the actual engagements and reports, financial statements and the engagement
questionnaire for each engagement selected. For
initial peer reviews, you should, along with your reviewer, choose a one-year
period for which the review will cover. It is
suggested that you maintain your firm’s review year from review to review.
Review periods may only be changed on subsequent reviews by the firm’s
request to the ASCPA Peer Review Staff to be handled on a case-by-case basis.
Subsequent reviews should be completed within three years and six months after
the period ending date of the previous review. Engagements selected for the
review should be those having years ending during the year under review, unless
financial statements have been issued that cover a more recent year.
The review period must not end before December 31 of the previous
calendar year. Within
thirty days of the exit conference of the review, your reviewer will submit a
written report, and, where required, a letter of comments (LOC) (system and
engagement reviews only). In
addition to the report and LOC, the reviewer will also submit the working papers
to the Society. As the reviewed
firm, you are responsible for submitting a
letter of response (LOR) regarding any matters discussed in the reviewer's
report and LOC to the Society office within thirty days of the date you receive
these materials. For report
reviews, there is no separate LOC, so the firm is not required to submit a
separate LOR. The firm is required, however, to submit a signed copy of the
reviewer’s report, which will contain his/her comments and recommendations to
the firm relevant to their peer review. The
AICPA’s definition of “due date” is the
date by which all review documents, including the firm’s response
(if applicable), should be submitted to the administering entity.
In order to comply with the scheduled due date, your peer review should
be scheduled early enough so that all documents are received by the Society
office prior
to the scheduled due date. If you
are unable to have you review by the scheduled due date, you should submit a
letter to the ASCPA prior to the review due date, citing the reasons why you
cannot have the review, as well as give an alternative date for your review.
Extensions are granted for valid reasons on a case-by-case basis.
THE
AICPA DOES NOT CONSIDER TAX SEASON A VIABLE REASON TO GRANT EXTENSIONS ON PEER
REVIEWS. THEREFORE, THE ASCPA WILL
NOT GRANT EXTENSIONS BASED ON TAX SEASON. If your firm’s due date falls during tax season, you will
be given the opportunity to schedule the review early to bypass the rush. If your firm performs engagements under Generally Accepted Government Auditing Standards (GAGAS), and you request an extension on the assigned due date of your upcoming peer review, please be advised that the U.S. General Accounting Office (GAO) does not accept extensions granted by the administering entity beyond three (3) months. Requests for extensions beyond three (3) months for firms that perform audits under GAGAS can only be granted by the GAO. Important Notice to Firms Performing Audits in Accordance with Government Auditing StandardsGovernment Auditing Standards issued by the Comptroller General of the United States (the "Yellow Book") requires that organizations conducting audits in accordance with these standards have an external quality control review at least once every three years. The footnote to paragraph 3.52f the Yellow Book states that "external quality control reviews should be completed within 3 years after the issuance of the prior review."The AICPA Peer Review Program staff advises State CPA Societies that extensions of due dates for peer reviews are not appropriate for firms performing Yellow Book audit engagements completed or issued during the period between firm's peer review review due date and the date the peer review is completed (the date of the report), as such engagements will be automatically considered to be substandard. The presence of substandard engagements may result in a modified or adverse report on a firm's peer review. Therefore, firms that perform Yellow Book engagements should carefully evaluate the guidance before allowing too much time to elapse between peer reviews.Please be sure to consider the above when scheduling your firm's upcoming peer review.For
report reviews, the peer reviewer will prepare a written report after discussing
comments and recommendations with the firm and submit it to the reviewed firm
and the administering entity. An
authorized member of the firm is then required to sign the report, whether or
not there are comments, acknowledging that there are no disagreements on
significant matters and that the firm agrees to correct matters included as
comments. The firm is then required
to submit the signed copy of the report to the administering entity.
However, a firm is not prohibited from attaching a “response” to the
signed copy of the peer review report. Once
the working papers and LOR (if applicable) have been received, the review file
will be forwarded to an out-of-state CPA who has been engaged by the Society for
the performance of technical reviews. During
this process, the technical reviewer will read the report and working papers to
determine if the reviewer's conclusions and findings are consistent with the
peer review standards as set forth by the AICPA Peer Review Board.
The technical reviewer may propose changes to the report, LOC or LOR,
based on her findings during the technical review. On
report reviews, performance of a technical review is required by the
administering entity, but committee consideration is not always required.
This process is only allowed on report reviews.
The technical reviewer is delegated the authority to accept report
reviews on the committee’s behalf when the technical reviewer determines there
are no significant issues. Should the technical reviewer determine there are significant
issues, the report review will be submitted for committee consideration.
The technical reviewer may not impose corrective actions.
Only the committee can consider any corrective actions. After
a system or engagement review has been technical reviewed (report reviews when
required), the review will be presented for approval at an upcoming meeting of
the ASCPA Peer Review
Committee. After the committee
has accepted your review, you will receive a letter of acceptance approximately
ten (10) days following the meeting. The
committee acceptance letter will indicate a due date for the subsequent review,
which will be scheduled three years and six months after the period ending date
of the review just completed. By
knowing this date in advance, you and your firm can prepare early for your next
peer review. If the subsequent due
date should fall during tax season, the ASCPA will give your firm the
opportunity to have the review early. If your firm should receive a
modified report, the committee may require completion of some type of corrective
or follow-up action before your review is accepted.
Monitoring your firm's implementation of changes through corrective
monitoring actions helps you to avoid situations that may lead to a modified
report in the future. Submission of your firm's next inspection report and/or completion of specific continuing education courses are the most common follow-up actions for system and engagement reviews. The committee may ask the reviewer to revisit your firm if a number of serious deficiencies are discovered during the review. Other options may be to have an accelerated review, or to have preissuance reviews of audit and compilation engagements by a committee-approved reviewer. Submission of the subsequent year's
financial statements (for those engagements identified as having significant
deficiencies) is the most common follow-up action for report reviews. Completion
of specific continuing education courses is another option. |
|
