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Peer Review: Frequently Asked Questions

December 18, 2023

1. What is happening with peer review at MassCPAs?

Effective Thursday, May 16, 2024, MassCPAs officially joined New England Peer Review (NEPR) as our preferred Administering Entity (AE) for peer review. This transition comes after a lengthy and deliberate evaluation and selection process that included the Peer Review Executive Committee (PREC), Peer Review Executive Selection Committee and the MassCPAs Board of Directors. For more information, please click here. 

2. What is a peer review?

A peer review is a systematic review of a firm's accounting and auditing practice by other Certified Public Accountants (CPAs) to ensure that they are following professional standards and guidelines.Peer reviews help maintain the quality and consistency of accounting and auditing services provided by CPAs. They also ensure that firms are complying with professional standards and ethics.

3. Is peer review mandatory for all accounting firms?

The Commonwealth of Massachusetts requires that all public accounting firms performing audits, reviews and/or compilation reviews have an official peer review completed every three years to maintain their business license.

The AICPA requires that firms that are engaged in covered services must be in an approved monitoring program to maintain their AICPA membership.

4. What are the stages of peer review?
  1. Enrollment – Administered by Administering Entity (AE) and the National Peer Review Committee.
  2. Peer Review Information – Firm provides information on the types of engagements, practice areas, and industries performed during the peer review year.
  3. Scheduling – Firms choose their peer reviewer who is confirmed by AE for suitability and availability.
  4. Review Process – Responsibility of peer reviewer.
5. What happens during a review?

During a review, a qualified peer reviewer visits the firm to inspect a collection of work to make sure it is up to the profession's standards and in compliance with state and federal law. An independent team of CPAs examines a firm's workpapers, reports and procedures to assess compliance with professional standards. They may also interview firm personnel.

If a firm is found to be in compliance with professional standards, it receives an unmodified report. If there are deficiencies, the firm may be required to take corrective actions.
 
The peer review process is designed to be as objective as possible, with a focus on evaluating a firm's compliance with professional standards and guidelines. However, like any review or assessment process, there may be some subjective elements involved. It is best to discuss these directly with your chosen peer reviewer. Firms can prepare by ensuring their workpapers are well-organized, their staff is trained on professional standards, and they have systems in place for quality control.

6. What are the types of peer review?

Peer reviews can either be system reviews or engagement reviews which have different applicability and objectives:

  • System Review – Obtain reasonable assurance that the reviewed firm’s system of quality control (QC) for its accounting and auditing (A&A) practice has been designed and complied with to provide the firm with reasonable assurance of performing or reporting in conformity with the requirements of applicable professional standards in all material respects.
  • Engagement Review – Enrolled firms that only perform services under SSARSs or services under the SSAEs that do not require System Reviews are eligible to have Engagement Reviews. The purpose of the Engagement Review is to evaluate whether the engagements submitted for review are performed and reported on in conformity with applicable professional standards in all material respects, and to report on the evaluation of selected engagements.
7. What is the process of a report acceptance?

Report acceptance is the responsibility of the AE. 

1. Admin review – Makes sure all required information has been submitted to the AE 

2. Technical Review – Ensures the review was performed in accordance with the AICPA Peer Review Standards 

3. Committee Acceptance:

  • Receive materials submitted by peer reviewer, technical reviewer, and other appropriate information about the firm.  
  • Ensure the review was performed in accordance with the AICPA Peer Review Standards.  
  • Ensure they are in agreement with the peer reviewer’s conclusions.  
  • Responsible for accepting the report as well as issuing any corrective actions or implementation plans. 

4. Potential Corrective Actions – Addresses the error and help the firm from making the same mistake again. 

5. Completion

8. Who conducts peer reviews?

Peer reviews are typically conducted by independent CPA firms that are approved by the AICPA's Peer Review Program.

9. How can I find a peer reviewer for my firm?

Firms select their own peer reviewer.It is important to note that firms can select a peer reviewer from any state. The location of your peer reviewer does not impact the outcome of your peer review. The AICPA's Peer Review Program can provide a list of approved peer reviewers, so firms do not need to go through MassCPAs to find a reviewer.

10. My firm is in the AICPA Governmental Audit Quality Center (GAQC) Program. Do I need to select a peer reviewer who is also in the program?

Yes. Firms in the GAQC Program must work with a peer reviewer who is also in the GAQC Program. The AICPA’s Peer Review Program can provide a list of approved peer reviewers in the GAQC Program. As with other peer reviews, GAQC Program firms can select a peer reviewer from any state. The location of your peer reviewer does not impact the outcome of your peer review.

11. Can I change peer reviewers?

Yes. Firms select their own peer reviewer and can change to a new reviewer at any time. The location of your reviewer does not impact the outcome of your review, so firms can select from a wide range of reviewers nationwide to find the best fit for their firm. The AICPA's Peer Review Program can provide a list of approved peer reviewers, so firms do not need to go through MassCPAs to find a reviewer.

12. What is the role of the Administering Entity (AE) and Peer Review Executive Committee (PREC)?

The AICPA’s Peer Review Program is operated by the AICPA. 

The Peer Review Executive Committee (PREC) assists with the direction of the program. In December 2023, after a lengthy and deliberate evaluation and selection process, and at the request of the Peer Review Executive Committee and support of the Peer Review Executive Selection Committee, MassCPAs Board of Directors unanimously voted to transfer administration of the AICPA’s Peer Review Program to New England Peer Review (NEPR). Effective Thursday, May 16, 2024, MassCPAs officially joined NEPR as our preferred Administering Entity (AE) for peer review. For more information, please click here.