The AICPA’s Peer Review Board has approved significant changes to the Peer Review standards, interpretations and other guidance that are effective for peer reviews beginning after January 1, 2017.

What can peer reviewers expect?  While most of these changes will affect how a peer reviewer performs the review, some of them will affect firms undergoing a review.  Here are some of those changes to assist your firm in preparing for peer reviews commencing in 2017 or later. 

Quality Control System Documentation

 Peer reviewers will now complete a vigorous review and assessment of a firm’s system of quality control and its compliance with that system.  In the past, firms were permitted to document their systems of quality control using the AICPA’s Quality Control Policies and Procedures Documentation Questionnaires (4300 and 4400 checklists), but the AICPA will no longer provide these checklists, and firms must develop quality control documentation tailored specifically for their firms.  To aid firms in developing this documentation and to assist them in laying the groundwork for successful peer reviews, the AICPA has developed tools that firms may use free of charge.  These tools can be found in the peer review section of the AICPA website (aicpa.org). 

Changes to the Peer Review Process

• Documents to be provided in a System Review – Firms will be required to provide a copy of the inspection reports for each of the three years subsequent to the prior peer review and any relevant communication about those inspections such as consultant review reports.

• Closing meeting – Before finalizing a peer review, reviewers must now conduct a closing meeting with senior members of the firm in addition to the peer review exit conference firms have experienced in the past. The meeting will discuss the review team’s preliminary matters, findings, deficiencies or significant deficiencies and evaluate the firm’s responses.

• Firm representation letters – The new standards call for separate firm representation letters for System Reviews and Engagement Reviews. Firm representation letters for Engagement Reviews should now be dated the same day as the peer review report.  Reviewed firms should not remove any of the required representations from their letters but may include additional information if deemed appropriate.  Some of the required representations are new or have changed so firms should ensure they are using the most up-to-date language or the letters will not be accepted and may delay acceptance of the firm’s peer review report. 

• Reporting changes – There are some clerical changes to the peer review report including a reorganization of information and headings for select paragraphs. 

Mississippi State Board of Public Accountancy Rules Change

The Mississippi State Board of Public Accountancy has amended the rules regarding peer review to specifically include preparation engagements in the peer review process.  The intent of this rules change is for a preparation engagement to basically be a must select in both System and Engagement Reviews.  In both types of reviews this may result in additional engagements above what the AICPA standards require being selected to ensure that a preparation engagement is selected.  Also, firms that only do preparation engagements will be included in the peer review program in the State of Mississippi.  Under the AICPA rules, those firms would otherwise not be included.   

Additional information can be found on the Peer Review section of the AICPA website at aicpa.org.