Peer Review

To the Public

The program is intended to help the public understand the oversight of firms and gauge the ability of a firm to provide certain services at an expert level. The AICPA oversees the program, and the review is administered by the MICPA, who has been approved by the AICPA to perform to this role.

There are two types of peer reviews: System Reviews and Engagement Reviews. System Reviews focus on a firm's system of quality control and Engagement Reviews focus on work performed on particular selected engagements.

When a CPA firm receives a System Review from the peer reviewer with a peer review rating of pass, the report means that the system is appropriately designed and being complied with by the CPA firm in all material respects.  If a CPA firm receives a report with a peer review rating of pass with deficiencies, this means the system is designed and being complied with appropriately by the CPA firm in all material respects, except in certain situations that are explained in detail in the peer review report.  When a firm receives a report with a peer review rating of fail, the peer reviewer has determined that the firm's system is not suitable designed or being complied with, and the reasons why are explained in a detailed report.

To Firms

Peer reviews are required of all firms that are members of the American Institute of CPAs and all Michigan firms or sole practitioners that perform audits, reviews, compilations, preparation of financial statements or other attest engagements. Currently, CPA firms undergo a review of their accounting and auditing practices at least once every three years.  If a firm only performs preparation engagements peer review is not required.

If a deficiency or significant deficiency included in the peer review report is associated with an engagement that was not performed and reported on in conformity with applicable professional standards in all material respects ("nonconforming") in a must select industry or practice area or is industry specific, the report will identify the industry or practice area. However, because the purpose of a System Review is to report on the firm's system of quality control, the peer review report might not describe every engagement that was deemed nonconforming.

The firm is responsible for evaluating actions to promptly remediate engagements deemed as not performed or reported in conformity with professional standards, when appropriate, and for remediating weaknesses in its system of quality control if any. The firm's response is evaluated to determine if it is appropriate, whether lack of response is indicative of other weaknesses in the firm's system of quality control, or whether monitoring procedures are necessary to verify the deficiencies and nonconforming engagements are remediated.

To Reviewers

The ability to perform peer reviews gives a CPA firm access to an entirely new client pool. In addition, the peer review process helps to ensure that firms provide services that meet high standards of quality and maintain the integrity of the profession. To find out what qualifications are necessary and how to become a peer reviewer, see the necessary qualifications at AICPA.org.

Reviewer Alerts

Peer Review Resources