What you need to know about Peer Review Process?
What is Peer Review?
Peer review is the process of action taken by equally experienced professionals for the purpose of giving more support and acceptance to the statements already prepared. The recheck or affirmation here is based on a sincere and professional approach. The duty of reviewers is not to accept or reject the statements but just recommendations. The main purpose of the peer review process, in a nutshell, is to monitor the control for accounting and auditing practice.
Types Of Peer Review
The American Institute of a cooperating professional accountant (AICPA) has gone to the length of highlighting types of peer review and they are system and engagement review:
The systematic review is required for the purpose of checking the effectiveness of the system and the degree of compliance with the system. The system review verifies the level of accounting and auditing system of the organization. The system technical review process also looks into the regular set of actions of the firm in accordance with the auditing and recommendation.
Some firms are registered under the SSARS or SSAEs. Such firms do not have the review process as their highest level of service. It is for the likes of these firms that engagement review is necessary. In this type of review process, the evaluation of action taken is what is simply considered. That is, whether the submitted engagements are followed and the requirements of the professional standard are strictly followed.
Types Of Peer Review Teams
Firm on firm review
This is a situation whereby another qualified CPA firm is hired to conduct the review. This is said to be cost effective and gives assurance on the qualifications of the review team.
If your firm belongs to an association, the association can raise a team of reviewers if you ask for it. The association in question should be one that is authorized by the AICPA.
Committee-Appointed Review Team (CART) review
This review is basically recommended for the engagement reviews. Here, the administering entity has control over many things once the prescribed team has been affirmed. The control includes the cost and duration.
Many firms often lose interest in peer review based on the clause of confidentiality. Documents that hold important and sensitive information will be involved. However, the AICPA code of conduct provides for the rule of confidentiality. In other words, peer review agents are not to reveal such information gained in the process of review in any form.
It should be noted that the peer review process is a compulsion for any firm under the US GAAP and this is a requirement that should be met by such firms or organizations for at least, once in three years.
Also, once a firm is enrolled under the AICPA peer review program, the first due time for the peer review is eighteen months after the date of enrolment.