Peer Review Program for the Future
For more than 35 years, the AICPA Peer Review Program has helped to improve the quality of accounting and auditing services. As the business environment rapidly changes, it brings increasing complexity to the financial statement audits that are performed. In an effort to proactively adapt to the challenges that will inevitably arise, the AICPA has proposed a new concept as part of its Enhancing Audit Quality initiative for the future of peer review. The new approach is dubbed the “Practice Monitoring Program”, a name that emphasizes the continuous accessibility and advancement of the peer review process.
The new program will be based around a technology platform that will allow it to more effectively use technological innovations and provide timely transparent results. The proposed plan includes an initial phase in which a self-monitoring tool would be a pilot tested by selected firms of various sizes. After receiving feedback from this initial phase and making any necessary changes, the program would replace the current peer review program.
The new program is designed to embrace the strengths of the current program and to improve the peer review process by involving a more dynamic technological platform. The goal in mind is to provide close to real-time detection and correction of quality issues in auditing and attestation engagements, as opposed to several months later. This means that as a firm completes an audit, from acceptance to completion, the performance would be monitored and quality issues would be flagged immediately. The timeliness of this information would be extremely useful to remedy the issue before the completion of the engagement. In the current concept, a dashboard will be used to provide a summary of the firm’s compliance and performance as well as any flags relating to current engagements. In addition, an external electronic display, called a Seal, would be viewable online and provide the public with information about the firm’s performance.
The Practice Monitoring Program concept would benefit CPA firms by promptly providing important feedback that will increase efficiencies throughout the profession. Furthermore, the increased transparency resulting from more easily accessible information will assist the general public in verifying a CPA firm’s quality. The concept includes more detailed description of potential implementations; however, the advantage of timely feedback and transparency serve as an effective foundation for the program.
Article written by David L. Neiman, for additional information contact Robert F. Firely at firstname.lastname@example.org.