The Peer Review Process

A fact of life for those of us working in a CPA firm, and that the general public might not be familiar with, is the process we in the industry like to call the peer review.

I know, I know … It might seem odd to find out that there is a service performed by CPA firms that the general public, and even many businesses, aren’t aware of. After all, CPA firms make their money by providing their services to individuals and businesses, right? Wouldn’t a lack of knowledge about a particular service indicate a serious failure on the part of the industry that provides that service? Well, in this case, no.

The lack of knowledge about peer reviews as they relate to the world of accounting is not a failure of marketing or advertising on the part of the accounting industry. This is because peer reviews occur within the accounting industry; they are provided by one accounting firm to and for another accounting firm.

Essentially, peer reviews are audits of the auditors.

In a peer review, as the name indicates, a CPA firm that’s qualified to perform the service will review the practices and procedures of another CPA firm, to ensure that their operations meet general industry standards and possibly standards specific to the firm’s state or specialty area of practice.

Though the public may not be widely aware of the peer review process, an understanding of it can help them in a number of ways. For example, an individual or a business interested in hiring a CPA firm will want to do their due diligence in assessing whether a firm has undergone an appropriate peer review within an appropriately recent amount of time.

Though successful completion of the peer review process is no guarantee of the quality of a firm’s work with you or your business, it is at least one piece of evidence that a firm is capable. Here are some further details about the process.

The Process For Firms

All CPA firms that are members of the American Institute of CPAs are required to undergo a peer review. In certain states, all businesses that perform certain accounting services—audits, for example—may be subject to a peer review. Be sure to check with the specific guidelines of your state to further understand your potential responsibility.

The Process For Reviewers

Becoming certified to perform peer reviews of other CPA firms can be very rewarding for a firm that chooses to do so. Not only can you give back to your profession by ensuring high quality standards, but your status as a provider of CPA firm peer reviews may make you more attractive to clients. Of course, it will also provide you with a new market of clients to provide services to.

The Timeline

Many CPA firms have a peer review conducted on a consistent basis — at least once every few years. If your CPA firm is in need of a peer review, it is important to understand that there is a process to the review that can take many months to complete in its entirety.

If you feel you may be in need of the service, the sooner you get it scheduled the better. Not only do you need to schedule the review in advance, you may also be required to submit materials in advance and the review itself could take place over the course of a month or longer. The results of the review are then compiled by the firm completing the review in another potentially lengthy process, with the results then delivered to the client, along with any follow-up recommendations.