Basic Information | Top
If you're interested in learning more about how to become part of the Peer Review Program, or how to hire reviewers for your firm, check out these resources:
Peer Review Program Oversight | Top
The VSCPA Peer Review Program is subject to administrative oversight of the Program and staff every other year by the American Institute of CPAs (AICPA). In addition to the on-site oversight conducted by the AICPA, the VSCPA Peer Review Committee Chair performs oversight during the years between AICPA on-site oversight. The 2016 oversight report requirement was waived.
Enrollment Information | Top
Does your firm need to enroll in a peer review program? If your firm is performing accounting and auditing engagements that fit the definition below, then the firm must enroll.
Accounting and auditing engagements for the purposes of peer review are defined as all engagements covered by Statements on Auditing Standards (SAS), Statements on Standards for Accounting and Review Services (SSARS), Statements on Standards for Attestation Engagements (SSAE), and the Government Auditing Standards (Yellow Book) issued by the U.S. Government Accountability Office Office (GAO).
The AICPA's revised SSARS 21 revised the standards for reviews, compilations and engagements to prepare financial statements, including allowing CPAs to prepare financial statements without presenting a compilation report. Virginia's SB 1125 amended the accountancy statutes to clearly include the preparation of financial statements under the services for which a firm license is required, whether or not the CPAs in question are providing attest and compilation services. Firms otherwise subject to peer review that also perform the preparation of financial statements under SSARS 21, Sec. 70, will have such engagements included within the scope of their peer reviews.
Firms that perform the preparation of financial statements under SSARS 21, Sec. 70 as their highest level of service, while required to have a Virginia firm license, are not required to enroll in the Peer Review Program. However, should these firms choose to enroll, then a peer review is required.
If your firm does not have any AICPA or VSCPA members and you would like information on the VSCPA Peer Review Program, please click here. (State Board of Accountancy Firms)
The Peer Review Process | Top
Enrollment — After a firm's enrollment has been approved, a due date for the firm's initial review is assigned. Generally, the due date for the firm's first review is set about 18 months after program enrollment.
Scheduling — Approximately six months before a firm's review due date, scheduling instructions will be sent via email. This must be completed in the PRIMA system in order for the review to be scheduled. It is the firm's responsibility to choose its own reviewer. The review should not commence until the firm has received notification that the reviewer has been approved to perform the review.
After the review — Once the review has been completed, the reviewer will submit a copy of the review report and required working papers via PRIMA. If no deficiencies were noted, the firm is not responsible for submitting anything. If the report noted any deficiencies, the reviewed firm’s responses are then submitted by the team captain along with the applicable working papers to the administering entity. If the reviewed firm’s response is not deemed to be comprehensive, genuine and feasible, the technical reviewer or RAB will request a revised response. If applicable, the firm must submit these materials via PRIMA within 30 days of the date the reviewer issues the report.
Administrative and technical reviews — These ensure that all the required documents from the reviewer and the firm are received and complete. The technical reviewers determine whether the review has been conducted in accordance with governing standards, and whether the firm has responded to any findings in an appropriate manner.
Committee process — Once all of the review documents have been through the administrative and technical review process they are presented to the Peer Review Committee for consideration of acceptance. After the Committee meets and accepts a review, firms should receive the review acceptance letter from the VSCPA within 14 days. However, some firms may be required to perform certain corrective follow-up actions before the review can be closed. Generally, except in the case where extensions have been granted, a firm's next review due date is set three years later.
All peer review documents and results are confidential. It is the firm's decision whether or not to publicize or release their peer review results. However, firms should remember that the results of a peer review should not be published until after the VSCPA Peer Review Committee has accepted it.
Types of Reviews | Top
This type of review is for firms that perform engagements under the Statement on Auditing Standards (SAS), the Government Auditing Standards (Yellow Book), examinations under the Statement on Standards for Attestation Engagements (SSAE), or audits of non-SEC issuers performed pursuant to the standards of the PCAOB as their highest level of service.
This type of review is for firms that are not required to have a System Review and only perform services under SSARS or services under the SSAEs not included in System Reviews as their highest level of service. Early acceptance is possible if there are no matters documented (or which should have been documented) on MFC forms related to engagements other than compilations performed under SSARS and such matters do not rise to the level of a finding, deficiency or significant deficiency and there are no other issues with the review warranting committee or RAB consideration or action. Such reviews are accepted early on behalf of the committee and the acceptance letter typically will be sent within a week or so after the team captain submits it to the VSCPA.
Click here for an AICPA overview of the differences between system and engagement reviews.
Instructions to Firms | Top
The following instructions are from the AICPA Peer Review Program Manual.
- Instructions to firms having a system review (PDF)
- Instructions to firms having an engagement review (PDF)
Letters of Response | Top
A firm is required to write a letter of response if the reviewer found deficiencies and the findings are Pass With Deficiencies or Fail. The following are illustrations of letters of response.
- Illustration of letter of response (LOR) for a system review
- Illustration of letter of response (LOR) for an engagement review
Access the AICPA's Frequently Asked Questions (PDF) publication on Peer Review. It answers your questions about enrollment, general information, information for enrolled firms, choosing a peer reviewer, preparing for the review, having the review, the report types, peer review committee consideration and acceptance and other matters.
Scope Limitation Waivers | Top
A reviewed firm may have legitimate reasons for excluding an engagement from the scope of the peer review, such as the engagement is subject to litigation. In these situations, the reviewed firm should submit a written statement to the VSCPA prior to the commencement of the review, indicating a) it plans to exclude an engagement(s) from the peer review selection process, b) the reasons for the exclusion and c) it is requesting a waiver from a scope limitation in the peer review report. Requests should be submitted to: Peer Review Program, VSCPA, 4309 Cox Road, Glen Allen, VA 23060; fax to (804) 273-1741; or email [email protected].
Acceptable reasons for excluding an engagement
- The engagement is subject to litigation.
- Client will not permit the firm to make the engagement available.
Unacceptable reasons for excluding an engagement
- The engagement working papers are in a warehouse.
- The firm no longer performs the audit for that client (and still has access to the documentation).
- The firm decided to no longer perform audits.
- The engagement was selected during the last peer review.
- The partner on that engagement will not be available for the scheduled dates of the peer review.
- The firm no longer performs engagements in that industry.
Extension Requests | Top
If a firm cannot have its peer review by the date assigned, the firm must submit a request for an extension through PRIMA prior to the due date of the review. The request should cite the reasons the firm cannot undergo the review and offer an alternative due date. Extension requests will be considered on a case-by-case basis and should not be made for any more than 90 days past the original due date. If a firm wishes to change its peer review year-end, that request can be made separately or in addition to any request for an extension of the peer review due date.
Special Note: If the firm requesting an extension performs engagements under Government Auditing Standards (GAS), the firm should be aware that the U.S. Government Accountability Office (GAO) does not accept extensions granted by the administering entity beyond three months. Requests for extension beyond three months for firms that perform audits under GAS can only be granted by the GAO. Per GAS, "the external peer review should be conducted within three years from the date they start field work on the first engagement under GAS. Subsequent external peer reviews should be conducted every three years. Extensions beyond three months can only be granted by GAO and should only be requested for extraordinary circumstances." Such requests should be addressed to: Michael C. Hrapsky, Senior Project Manager, Government Auditing Standards, U.S. Government Accountability Office, (202) 512-9535.
For questions about extension requests, please contact the VSCPA Peer Review Team at [email protected] or (800) 733-8272, option 4.