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For more information on the AICPA Peer Review Program in Arkansas, Contact Marsha Moffitt, Peer Review Manager mmoffitt@arcpa.org Choosing a Review TeamEach December, firms that are required to have a peer review during the following year will receive a "Request for Scheduling Information" form that will contain pre-printed information about the firm such as the firm name, address, AICPA firm number, review number and the due date (the date by which all review documents, including your firm’s response, should be submitted to the state CPA society. NOTE: PLEASE
COMPLETE THE SCHEDULING FORM WITHIN THIRTY (30) DAYS AND RETURN IT TO THE
SOCIETY OFFICE, EVEN IF YOU HAVE NOT MADE A REVIEWER SELECTION.
THE ASCPA CHARGES A $25.00 FEE FOR ALL SECOND AND THIRD REQUESTS FOR A
FIRM’S BACKGROUND INFORMATION.
It is imperative that you
submit the information related directly to your firm as soon as possible.
If you are unable to provide the reviewer information at this time, we
will request it later. If your firm performs
engagements under the SASs, or the yellow book or examinations of prospective
financial information under the SSAEs, you will have a “system”
peer review,
whereby the reviewer will study and evaluate your firm’s system of quality
control policies and procedures in order to provide reasonable assurance of
conforming with professional standards. It
is basically the same as the old on-site review with a name change only,
designed to more accurately describe the type of peer review since the reviewer
will be expressing an opinion on the firm’s system of quality control. An “engagement” peer
review is for firms that are not
required to have a system review, and are not eligible to have a report review,
as discussed below. The objectives
of an engagement review are to provide the reviewer with a reasonable basis for
expressing limited assurance that the financial statement and the related
accountant’s report on accounting, review and attestation engagements
submitted by the firm for review conform with professional standards, and that
the firm’s documentation conforms with the requirements of the SSARs and the
SSAEs in all material respects (new under the revised standards). An engagement review is similar to the
old off-site peer review wherein a separate report and letter of comments are
written, and the completed review goes through the technical review process,
committee acceptance, monitoring actions, etc.
Since engagement reviews do not cover the firm’s system of quality
control, the reviewer does not express an opinion on the firm’s compliance
with its own quality control policies and procedures or with quality control
standards, just conformity with SSARS and the SSAEs. Some examples of the documentation referred to above on a
review engagement include the management representation letter, the
documentation of the matters covered in the accountant’s inquiry and
analytical procedures, etc. A firm
must have an engagement review if it performs, as its highest level of service,
compilations referred to in the SSARSs as “selected information-substantially
all disclosures required are not included.” If your firm only performs
compilations that omit substantially all disclosures, you may have a “report”
peer review.
In a report review, the reviewer select a sample of engagements and gives
the firm a report that lists comments and recommendations based on whether the
financial statements and the related accountant’s reports appear to conform
with the requirements of professional standards in all material respects.
An authorized member of the firm is required to sign the report, whether
or not there are comments, acknowledging that the firm has no disagreements with
the comments and recommendations therein, and forwards a signed copy of the
report to the administering entity. There
is no separate letter of comments or letter of response; however, the firm it
not prohibited from attaching a response to the copy of the signed report.
A technical review is required on report reviews, but committee
acceptance by the administering entity’s peer review committee is required
only when the technical reviewer determines there are significant issues
requiring the committee’s attention. Only
the peer review committee may impose monitoring actions on the firm and/or
reviewer. NOTE:
There is a new type of financial statement service that can be
provided to clients in accordance with SSARS 8, which allows CPAs to assist
clients with the preparation of “plain paper” financials.
There must be a written agreement with the client and a confirmation that
the client understands that these financials will not be provided to any third
party. SSARS 8 financials must also
have a statement on the bottom indicating that they are “for internal
management use only.” Be aware
that SSARS 8 engagements are subject to peer review procedures if you are
subject to any one of the three previously listed peer reviews.
If the only compilation type work you perform is SSARS 8, then you may
claim exemption from peer review. If your firm is required to
have only a report review, you may choose to have an engagement or system
review. As well, if your firm is
required to have an engagement review, you may also choose to have a system
review. Such upgrades to your peer
review will qualify members of your firm to be peer reviewers or peer review
committee members. As you begin completing the
scheduling form, one of the most important decisions you will make will be to
choose the review team that will best accommodate your firm's needs.
For your convenience, the ASCPA now has an on-line
directory of reviewers to help you locate a qualified individual(s) to
perform your peer review. This
directory lists only those individuals who have elected to be listed in the
directory. For additional reviewer
information, contact Marsha Moffitt at mmoffitt@arcpa.org. When making the review team
selection, certain issues should be taken into consideration: Your review team must have current
knowledge in the areas and industries in which your firm practices in order to qualify for performing your
review. You may want to select your
team from a location other than your firm's operating region. However, do keep in mind that travel costs will incur during
system reviews by teams chosen outside your region for which your firm will be
responsible. You may want to choose a team
that comes from a firm of similar size and nature as your firm.
However, choosing teams from firms larger than your own may help you plan
for future growth. Be sure to check your review
team's references. Those with more review
experience will most likely be more
efficient and will be able to provide useful suggestions to your firm. The total cost of having your review is an
important issue; however, you should consider cost after the issues mentioned
above. After all, "you get
what you pay for". With the
exception of administrative fees charged by the ASCPA, all remaining costs of
your peer review are negotiated solely between you and your peer reviewer. Advanced preparation and your
firm's attitude about peer review, as well as your choice of the right review
team, can make your peer review one of the best experiences of your professional
life. It's a good idea to
"investigate" your reviewer before hiring him/her.
When interviewing a potential reviewer, ask for such information as:
Then call some of those firms
and ask questions such as:
Once you have chosen a review
team, you will need to decide, along with your reviewer, on the review's
commencement and exit conference dates. Be sure that ample time is allowed after the exit conference date for
all review documents, including your firm's response, to be submitted to the
Society office before the due date to keep the review process timely. If you have difficulties finding a
reviewer, the ASCPA Peer Review staff is available to assist you in locating the
reviewer that is right for your firm and your review. The budget for a system review and the
number of reviewers selected for service on a system review team will vary based
on the number of accounting and auditing hours of the reviewed firm and the
nature of a firm's practice. Based
on the experience in the peer review program, the following guidelines have been
prepared. A state society may
depart from these guidelines, if its evaluation of the information submitted
about the firm justifies such departure.
This estimate includes the time
spent by the review team in planning the review, performing the fieldwork,
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