By Phillip Coley, CPA
Partner, Coley, Eubank & Co., Lynchburg
Vice Chair, VSCPA Peer Review Committee
During 2016, the AICPA’s Peer Review Board approved significant changes to the Peer Review Standards, Interpretations and other related guidance that will become effective for reviews commencing on or after Jan. 1, 2017. While most of these changes will affect how a peer reviewer performs the review, some of them will affect firms undergoing a peer review. Here are some of those changes to assist your firm in preparing for peer reviews commencing in 2017 or later.
Documentation of a Firm’s System of Quality Control
Prior to 2017, firms were allowed to utilize one of the American Institute of CPAs’ (AICPA) questionnaires, Quality Control Policies and Procedures Documentation Questionnaire for a Sole Practitioner with No Personnel (PRP Section 4300) or Quality Control Policies and Procedures Documentation Questionnaire for Firms with Two or More Personnel (PRP Section 4400), as their quality control document. Effective Jan. 1, 2017, these questionnaires will no longer be available and, accordingly, firms will need to develop other written documentation of their system of quality control that is in accordance with the AICPA’s “Statements on Quality Control Standards”.
To assist firms in developing and maintaining their system of quality control, the AICPA offers the following resources:
- “A Firm’s System of Quality Control”, a course that provides a comprehensive review of the Statements on Quality Control Standards.
- An AICPA Audit and Accounting Practice Aid, Establishing and Maintaining a System of Quality Control for a CPA Firm’s Accounting and Auditing Practice, that includes tips, warnings and reminders to help practitioners better design and implement their quality control policies and procedures.
Peer reviewers will now be required to conduct a “closing meeting” with firms prior to finalizing the peer review. This closing meeting will be in addition to the peer review exit conference firms have experienced in the past. The purpose of this meeting is to discuss the review team’s preliminary matters, findings, deficiencies or significant deficiencies with senior members of the reviewed firm and remind the firm of their requirement to respond. This meeting will generally be held prior to the exit conference and, for system reviews, typically would be on-site, preferably at least 30 days prior to the firm’s due date. The exit conference would be held, usually via teleconference, after the firm has responded to any matters, findings, deficiencies or significant deficiencies and the team captain has assessed those responses. This closing meeting applies to engagement reviews as well, with the exception that both closing meeting and exit conference would be held via teleconference. The closing meeting and exit conference may be combined if, for example, there are no matters, findings or deficiencies to discuss or all matters have been resolved, responded to and evaluated. In these situations, the combined meeting should be held in person for system reviews.
Firms may find more information on the above resources, as well as other guidance for preparing for their peer review, at aicpa.org/InterestAreas/PeerReview/Pages/peer-review-guidance.aspx.