AICPA Proposes Peer Review Standards Change

The AICPA Peer Review Board has proposed changes to peer review standards that the board believes will eliminate inconsistencies and improve openness of reports for engagement reviews, the Journal of Accountancy reported.

The proposal (link to http://www.aicpa.org/Research/ExposureDrafts/PeerReview/DownloadableDocuments/PR-EngRev-ExDraft.pdf) , outlined in an exposure draft, would change the impact to an engagement review report when more than one engagement is submitted for review; the same deficiency occurs on each of the engagements submitted for review; and no other deficiencies exist.

Existing guidance under this scenario calls for a “pass with deficiencies” rating in the firm’s engagement review report. If the proposal is implemented, this scenario would result in a “fail” rating.

The “pass with deficiencies” rating came about as the result of an exception created when new peer review standards took effect Jan. 1, 2009. At the time, members of the peer review community commented that a “fail” rating under this scenario was unfair to a firm that performs multiple engagements with the same deficiency and no others. Since then, after hearing concerns about inconsistencies in the existing guidance and considering the perspective of report users, the PRB is proposing to eliminate the exception.

Anyone interested in submitting comments on the proposal can send an email to PR_expdraft@aicpa.org by July 5. If approved, the changes would take effect Sept. 1.