Peer Review

Getting Ready for Your System Review

PICPA will contact your firm 4-8 months before your firm's scheduled due date to begin making arrangements for the conduct of the review. Prior to the review, read the applicable sections of Standards for Performing and Reporting on Peer Reviews issued by the AICPA Peer Review Board, as well as these instructions. Completing the procedures listed under Prior to the Review should expedite your review.

The reviewed firm is responsible for assuring that the quality control policies and procedures in effect for the period covered by the review provide the firm with reasonable assurance that it has met its responsibility to provide accounting and auditing services that conform with professional standards. Also, firms should carefully evaluate the effectiveness of the way in which quality control policies and procedures are communicated to all professional personnel, and firms should determine that appropriate action is taken when inspection or other procedures reveal design or compliance deficiencies.

Prior to the Review

1. Identify the individual -- usually a partner -- who will be responsible for acting as a liaison with the review team.
2. Review and sign the engagement letter for the review.
3. Agree with the team captain on the date the review will commence -- which must allow enough time to submit all review documents to PICPA by the due date -- the 12-month period to be covered, and the anticipated exit conference date.
4. Submit the following to the team captain as soon as possible:
   • A completed quality-control policies and procedures questionnaire. The reviewer will furnish you with a blank copy of the questionnaire.
   • Copies of relevant manuals, checklists, etc., if practicable.
   • A listing of accounting and auditing engagements showing level of service, year-end, industry code, name of partner, and approximate total hours for accounting and auditing services.
   • A list of the firm's professional personnel, showing name, position, and years of experience with the firm and in total.
   • Any other information requested by the team captain.
5. Based on this information, the team captain will make a preliminary advance selection of engagements for review. The firm should complete profile sheets for those engagements and assemble all working papers, including the permanent files and reports, before the reviewer arrives.
6. Study the applicable guidelines for review of quality control policies and procedures that will be followed by the team captain, and make sure that the documentation that the team captain asks for is readily available.

   Examples of such documentation are noted in the following list, which is not all-inclusive:

   • Independence confirmations, documentation of independence of correspondents, and documentation supporting the resolution of independence questions
   • Personnel files, including employee evaluations
   • CPE records
   • Documentation regarding consultations with outside parties
   • Copies of firm and individual licenses to practice.

During the Review

1. Make sure firm personnel are available for discussion with the reviewer(s) as necessary.
2. The team captain will ask your firm to respond to "Matter for Further Consideration" forms. The firm should provide a thorough written response to those forms to avoid any misunderstanding about its quality control policies and procedures in the circumstances of the individual engagement.
3. Arrange for appropriate partners and staff to attend the exit conference. If the firm disagrees with any of the reviewer's findings, those differences of opinion that have not been previously discussed should be covered during the exit conference.

After the Review

1. Obtain the report and letter of comments, if any, from the team captain. These documents should be delivered to the firm within 30 days of the date of the exit conference.
2. Prepare a letter of response to the report and letter of comments and submit all three documents to PICPA within 30 days of the date the report and letter of comments are received from the team captain. The letter of response should be addressed to the "Peer Review Committee." The letter of response should be carefully prepared because of the important bearing it may have on the decisions reached regarding the acceptance of the review report. Take a look at a sample letter of response.
3. PICPA will not make the peer review report available to the public. The firm itself may do so if it wishes. However, the firm should not publicize the results of the review or distribute copies of the report to its personnel, clients, or others until it has been advised that it has been accepted by the PICPA.