Public Resources

Public Resources

 
 
 

Peer Review

Checks and Balances for CPA Firms

The CPA profession has taken steps to ensure the quality of attestation engagements – audits, reviews and compilations. Since 1988, the AICPA has required firms and individual licensees who perform attestation work to enroll in a peer review program. Peer review is a periodic outside review of a firm's quality control system in accounting and auditing with the goal of maintaining and improving the quality of these services. MACPA administers a peer review program in conjunction with the American Institute of CPAs. (See full requirements.)

  • Peer review will become a statutory requirement in March 2007 for all Michigan CPA firms or sole practitioners that provide attest services (audits, reviews and compilations relied upon by third parties).
  • Firms that audit publicly traded companies are subject to additional peer review requirements.
  • Peer review is designed to review a firm's internal quality control program and application of professional standards on a comprehensive basis.
  • The ultimate goal of peer review is to prevent problems by keeping CPAs educated about auditing standards and identifying action steps firms should take to improve their service. 
  • Several actions may be taken if a firm has a poor review. They are as follows: the peer review committee may ask individuals in the firm to take a certain amount of targeted continuing professional education, a firm may have an accelerated review (normally firms must be reviewed at least once every three years.), the firm may be required to have all newly issued audit reports reviewed by another firm for a period of time, or an outside inspection may be conducted.
  • The following are the most recent statistics for the Michigan Association of CPAs Peer Review program in which 241 reviews were completed:

            - 81 reviews received an Unqualified Report with a Letter of Comment

            - 145 reviews received an Unqualified Report without a Letter of Comment

            - 13 reviews received a Modified Report

            - 2 reviews received an Adverse Report