Key Strategies for Having a Smooth Peer Review

Do you look forward to your peer review as a learning experience or does the thought of it keep you up at night? We are all human and can make errors and oversights; however, with proper preparation those mistakes can be kept to a minimum. To help ensure positive peer review experience, firms should place an emphasis on quality firm wide, and this should be communicated consistently to all staff. By reinforcing or instituting some of the strategies below, your peer review can proceed more smoothly without unnecessary glitches.

Prioritize Education

Since many peer review findings are caused by a lack of knowledge of current professional standards, ensuring that you and your staff have adequate accounting and auditing continuing professional education (CPE) is essential to producing quality work.

In addition to issuing reports on the application of new standards, the American Institute of CPAs (AICPA) Center for Plain English Accounting offers frequent webcasts to help members stay up to date. The Center also answers questions submitted by members. Quality CPE can also be obtained from the AICPA, NJCPA and other sources. Do not go for cheap options just to get credits. Invest in yourself and your staff. Also, be sure that records of CPE for staff are maintained centrally by the firm, not by individual staff members, and monitor them frequently.

Get Your Work Reviewed

Policies and procedures such as a second partner review or a review by a qualified outside party are one of the best lines of defense against errors and oversights. The firm should have a policy regarding which types of engagements require an engagement quality review versus which may suffice with a review of just the report and financial statements. The person performing the review should not be otherwise associated with the engagement, and matters raised by the reviewer should be resolved prior to the issuance of reports.

Completion of reporting and disclosure checklists are also important quality controls, as long as those completing them investigate questions for which they are unsure of the meaning or applicability. Such checklists can serve as a valuable learning tool if utilized properly.

Avoid Common Errors

Give consideration to findings on other recent peer reviews, such as the following:

• Failure to properly implement SAS 145, Understanding the Entity and its Environment and Assessing the Risks of Material Misstatement, the new risk assessment standard, especially with respect to correctly identifying relevant assertions as those with a reasonable possibility of a material misstatement occurring

   

• Failure to document the performance of procedures to evaluate design and determine implementation of controls where required, including general IT controls

   

• Failure to properly adopt newer accounting standards, especially revenue recognition, leases and credit losses

   

• Failure to document the consideration of independence when nonattest/nonaudit services are provided, including identification of appropriate safeguards within the firm

   

• Failure to document single audit procedures including identification of compliance requirements subject to audit and those considered to be direct and material; testing of controls over direct and material compliance requirements to support a low assessment of control risk; and adequate substantive testing of major program direct and material compliance requirements

   

• For employee benefit plan audits, not documenting internal controls at the plan sponsor; not reviewing implementation of the complementary user entity controls specified in the service organization controls (SOC) report(s); and not documenting consideration of carved-out subservice organizations

For a complete listing of matters identified on peer reviews, the AICPA staff has summarized data collected from MFC (Matters for Further Consideration) forms for engagements with year-ends over 15-month periods from 2022 to 2024. The lists can be accessed at aicpacima.com/resources/download/examples-of-matters-in-peer-reviews.

Also, remember that it is time to get your new quality management (QM) document completed. Your QM system has to be in place by Dec. 15, 2025. The AICPA has many tools available to assist you in documenting the required risk assessment and designing your updated quality management document at aicpa-cima.com/ topic/audit-assurance/quality-management.

It is also important to select a peer reviewer with experience in the industries your firm serves and with firms your size. Obtain references from other firms your size before engaging the peer reviewer.

Taking steps to make sure your firm produces quality accounting and auditing products and finding a good peer reviewer will go a long way to making sure you have a positive peer review experience.

Part two of this article — steps to take once your peer review has begun — can be accessed at njcpa.org/newjerseycpa/summer-2025.

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Nina S. Sorelle Nina S. Sorelle, CPA, CGMA, is a consultant at Bowman & Company LLP. She is a member of the NJCPA and can be reached at nsorelle@bowman.cpa.