What is Peer Review and Why Is It Important

Organizations and individuals around the country rely on audit reports issued by CPA firms. When a CPA firm signs an audit report, they are certifying that they have done what is required by generally accepted auditing standards in order to issue that report.

But who checks up on the CPA firm to make sure they did what they were supposed to do? That is where the AICPA Peer Review Program enters the picture.

CPA firms enrolled in the AICPA Peer Review Program are required to have a peer review of their accounting and auditing practice once every three years.

Peer review provides a mechanism for a firm to engage a peer firm to review its system of quality control related to its application of professional accounting, auditing and attestation standards. This process strengthens a firm's quality control and encourages firms to improve processes and to correct any flaws in their system.

Firms have peer reviews because of the public interest in the quality of services provided by public accounting firms. Additionally, most state boards of accountancy require its licensees to undergo peer review to practice in their state.

Peer Reviews involve many organizations, including:

• AICPA Per Review Board (PRB) – The PRB is the senior technical committee governing the AICPA peer review program and is responsible for overseeing the entire peer review process.
• Administering Entities – The Peer Review Program is administered in cooperation with the state CPA societies and other administering entities.
• Peer Review Committees – The Peer Review Committee is an authoritative body established by an administering entity to oversee the peer reviews performed in that state or in other states it has agreed to administer.
• Report Acceptance Body (RAB) – A RAB is a committee appointed by an administering entity to ensure compliance with the requirements of the Peer Review Program.
• Technical Reviewers – The technical reviewer ensures that the workpapers clearly document the scope and results of the peer review.
• Peer Reviewers – Peer reviewers conduct system and engagement reviews for CPA firms. They are required to be active AICPA members in good standing, licensed to practice as certified public accountants, and have met certain knowledge, experience and training requirements.

At the conclusion of a peer review, a report is issued. Firms can receive a rating of pass, pass with deficiency(ies), or fail. Novak Francella has received pass ratings in all peer reviews since our inception.

The AICPA Peer Review Program plays a crucial role in maintaining the integrity and quality of CPA services. For clients, it provides peace of mind and assurance that their chosen CPA firm meets rigorous professional standards.