Peer Review

Getting Ready for Your Report Review

A report review is available to firms that perform compilations with no disclosures as their highest level of service.

A firm can arrange for a

• CART (Committee-Appointed Review Team) review
• firm-on-firm review
• association review

In each case, PICPA will determine that the prospective reviewer is qualified and meets the requirements of the reviewed firm as to size, geographical location, and industry specialization.

Prior to the review, the firm is required to provide the reviewer with summarized information showing the number of its compilation engagements, classified into major industry categories and broken down by each owner, partner, or shareholder who is responsible for the issuance of reports.

Based on this information, PICPA or the reviewer will indicate those major industry categories from which the reviewed firm should select reports. The financial statements may be in conformity with generally accepted accounting principles or with another comprehensive basis of accounting. The reviewer will select a sample of engagements to review. Furthermore, an attempt will be made to include clients in different industries.

The reviewed firm will submit to the reviewer the financial statements and accountant's report for each engagement selected, along with an engagement questionnaire for each engagement. The reviewed firm, if it wishes, can "white out" or otherwise mask client identity in the financial statements and accountant's reports.

A report peer review does not include the following:

• A review of working papers
• Tests of the firm's administrative or personnel files
• Interviews of selected firm personnel
• Other procedures performed in a system review

Accordingly, a report review does not provide the reviewer with a basis for expressing any form of assurance on the reviewed firm's system of quality control for its accounting practice. Instead, the reviewer gives the firm a report listing 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 reviewed firm is 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 the matters on which there was comment.